Ghana’s rapid GDP growth fueled by fiscal imbalances led to 2022 debt crisis – World Bank

The World Bank’s latest Ghana Public Finance Review Report highlights how Ghana’s decade-long economic growth, averaging 6.8% annually from 2009 to 2019, was undermined by rising fiscal deficits and unsustainable debt accumulation.

Despite a GDP per capita increase of 65% over the period, weak fiscal discipline and governance issues led to excessive borrowing, culminating in a debt crisis in 2022.

Ghana’s debt-to-GDP ratio reached 60% by 2019, with surging interest payments further straining public finances. The World Bank attributes the crisis to weak budgetary institutions, frequent budget overruns, and reliance on costly external borrowing.

To restore stability, it recommends implementing robust fiscal rules, capping external debt, and strengthening the independence of Ghana’s fiscal council. Urgent structural reforms are needed to ensure long-term economic resilience.