Ghana’s Borrowing Cap for 2025 Set at $250 Million Under IMF Agreement

Ghana is set to face a strict limit on its external borrowing in 2025, with a $250 million ceiling on all forms of external loans, including commercial loans.

This cap is part of a Memorandum of Understanding (MOU) signed between Ghana and its Official Creditor Committee (OCC), with a provision for the International Monetary Fund (IMF) to monitor and assess Ghana’s compliance with the borrowing limit on an annual basis.

The MOU, which was signed by participating creditor nations, aims to curb Ghana’s rising debt levels, ensuring that the country does not exceed the borrowing threshold as it continues its debt restructuring efforts. The ceiling is now considered a structural benchmark under Ghana’s ongoing IMF program, reinforcing the need for fiscal discipline and sustainable debt management.

The borrowing cap is a key component of Ghana’s broader strategy to address its debt crisis. Following the suspension of external debt servicing in 2022, Ghana has been working to restructure its debt, which includes the swapping of $13.1 billion in outstanding Eurobonds for new, more manageable notes. The $250 million borrowing limit serves as a safeguard to prevent the accumulation of more unsustainable debt while the country works to stabilise its finances.

Additionally, Ghana is engaged in negotiations with commercial creditors, including Eurobond holders, to finalise the terms of debt relief, following the comparability of treatment principle. This principle ensures that all creditors—both bilateral and commercial—share an equitable burden of debt relief, easing the financial strain on Ghana’s economy.

The borrowing cap presents a significant challenge to the new administration under President John Mahama, who campaigned on ambitious infrastructure development plans. The limit directly impacts the government’s ability to raise funds for key infrastructure projects and capital expenditure (CAPEX), as external borrowing is a primary source of funding for large-scale initiatives.

In response to the cap, the Ministry of Finance has instructed government agencies to exclude externally funded CAPEX from their 2025 budgets. Instead, the Ministry will work with bilateral creditors to prioritise projects that are critical to the country’s development, effectively delaying some projects until the government can secure funding under the cap.

Despite the borrowing restrictions, treasury bills remain a vital financing tool for the government, though high interest rates continue to strain the nation’s fiscal health. Elevated rates make it more expensive for the government to raise funds domestically, further complicating efforts to meet fiscal targets while delivering on campaign promises.

The NDC administration now faces the dual challenge of managing restructured debt while fulfilling promises to improve infrastructure, create jobs, and stimulate economic growth. Given the limited borrowing capacity and the ongoing need for fiscal consolidation, the government will need to rely heavily on innovative financing solutions, including public-private partnerships and concessional loans from international partners, to meet its development objectives.

In an interview with Bloomberg during the Munich Security Conference in February 2025, President Mahama clarified that his government does not intend to extend the IMF program beyond its scheduled conclusion in May 2026. An extension of the program would impose even stricter fiscal controls, making it harder to execute key projects and initiatives.

The IMF’s fiscal constraints would limit public spending and continue to restrict the government’s ability to raise funds for critical infrastructure development, leaving the Mahama administration with limited room to manoeuvre in addressing the country’s growing development needs.

Despite these challenges, Ghana’s government remains focused on maintaining fiscal discipline, completing the restructuring process, and gradually restoring the country’s financial stability while navigating the tough economic landscape created by the borrowing cap and the broader debt restructuring program.

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