Ghana’s debt crisis has taken center stage, with the government owing a staggering GHS 67.5 billion to contractors and suppliers.
In a bid to address this, Joe Jackson, CEO of Dalex Finance, has proposed a repayment program that involves a 20% haircut on the total amount, with 40% offered in long-term bonds and the remaining 40% paid in cash.
“I don’t think it is anywhere realistic to expect that the GHS67.5bn arrears will be cleared in this budget,” Jackson said during the NorvanReports and Economic Governance Platform (EGP) X Space Discussion on the topic, “Resetting The Economy: Can Ghana’s 2025 Budget Achieve Fiscal Stability and Sustainable Growth”.
“I think what should be done is that the Government comes up with a programme to renegotiate with contractors and suppliers.”
He believes that his proposed program is the way forward, stating, “For me, I think the programme should be one where contractors and suppliers take a 20% haircut, 40% is given in long-term bond, and the remaining 40% is paid in cash.”
This innovative idea aims to provide a win-win situation for both the government and contractors, allowing them to recover some of their debts while also providing the government with a manageable repayment plan.
The government’s debt has been a major concern, with the road sector alone recording arrears of GHS 21 billion.
Ato Forson, the Finance Minister, highlighted the issue during the presentation of the 2025 Budget Statement and Economic Policy, stating, “At the end of December 2024, total central government arrears amounted to GHS67.5 billion, representing 5.2% of GDP.”
The breakdown of the arrears is alarming, with GHS 49.2 billion in outstanding interim payment invoices from Ministries, Departments, and Agencies (MDAs), and GHS 18.3 billion in bank transfers at the Controller and Accountant General’s Department.
Additionally, the government owes $1.73 billion to Independent Power Producers (IPPs), GHS 68 billion to contractors of the Electricity Company of Ghana (ECG), GHS 32 billion to contractors of COCOBOD, and GHS 5.75 billion to various contractors of the Ghana Road Fund.
Meanwhile, the Ghana Stock Exchange (GSE) has extended its rally, with the benchmark GSE Composite Index (GSE-CI) posting a 24.97% year-to-date return.
The market’s positive sentiment is driven by improving macroeconomic indicators, with analysts expecting equities to continue their rally. As the government works to address its debt crisis, the performance of the GSE will be closely watched.
