Seth Terkper Warns of Potential Debt Default by 2028

Ghana’s Presidential Advisor on the economy, Seth Terkper, has warned of potential debt default while defending the government’s 2025 budget.

Seth Terkper meanwhile, emphasized the necessity of austerity measures to address the country’s external debt burden. He noted that Ghana must explore alternative debt solutions to prevent defaulting on its external debt obligations between 2026 and 2028.

Terkper made these remarks at a farewell ceremony honoring Simon Madjie, the former Executive Secretary of the American Chamber of Commerce-Ghana, who now serves as the CEO of the Ghana Investment Promotion Centre (GIPC). He highlighted the country’s evolving debt portfolio and the urgent need for strategic financial decisions.

“As we speak, we’ve just cleared the first and suspended budget, and three more major ones are ahead. For instance, one of them is an outlier, but the years 2026, 2027, and 2028 will be crucial. We must find a solution—whether through paying down the debt or refinancing” he said.

He further warned that without decisive action, Ghana faces the rare possibility of defaulting on its debt for the third time.

“Otherwise, there is a rare possibility of defaulting for a third time. That’s the reality, and this is the concern driving the tough austerity measures in the current budget,” he added.

Debt Burden

Ghana has faced significant economic challenges in recent years, with rising debt levels prompting the government to adopt strict fiscal policies. The 2025 budget, which Terkper defended, aims to balance economic growth with necessary austerity measures to stabilize the nation’s finances.

One of the key concerns is the country’s external debt service obligations. Minister of Finance Dr. Cassiel Ato Forson has expressed concerns over Ghana’s debt servicing burden, noting that the country is expected to pay a total of US$8.7 billion in debt servicing over the next four years, amounting to 10.9% of GDP. The largest payments are anticipated in 2027 and 2028, raising concerns about the country’s ability to meet its financial obligations.

This debt burden has fuelled discussions on alternative financing options, including refinancing existing debt and restructuring payment plans. Economists and policymakers have stressed the importance of finding sustainable solutions to avoid another financial crisis.

Growth

While debt management remains a top priority, the government is also focused on creating a conducive investment climate.

Speaking at the farewell ceremony, the newly appointed CEO of GIPC, Simon Madjie, assured businesses of the government’s commitment to fostering a pro-investment environment.

“I believe our country is truly open for business. The government is committed to reviewing the GIPC law to reflect the AfCFTA centre for investment. There will also be efforts to boost investment in sectors such as agribusiness, manufacturing, pharmaceuticals, and the 24-hour economy, as promised by His Excellency, President John Mahama.”