Debt, inflation and interest rates decline as macro pressures recede 

By Joshua Worlasi AMLANU

The country’s public debt declined by GH¢82.1billion in 2025 – one of the largest annual reductions in its fiscal history – as tighter expenditure controls and improved macroeconomic conditions strengthened government’s balance sheet, the finance ministry said.

In a statement, the ministry said the debt stock fell from GH¢726.7billion, equivalent to 61.8 percent of gross domestic product (GDP) in December 2024, to GH¢641billion or 45.3 percent of GDP by end-December 2025. The decline was driven by stronger fiscal outturns and debt management measures implemented during the year.

The fiscal turnaround was anchored by a narrower deficit and a return to primary surpluses. The overall fiscal deficit on a commitment basis narrowed to 1.0 percent of GDP in 2025, significantly below the 2.8 percent target.

The primary balance on the same basis recorded a surplus of 2.6 percent of GDP, exceeding the 1.5 percent goal. On a cash basis, the overall deficit came in at 3.1 percent of GDP compared with a target of 3.8 percent while the primary balance posted a surplus of 0.5 percent of GDP.

The ministry said this outcome reflects fiscal discipline, tighter commitment controls, revenue mobilisation reforms and spending restraint, supported by prudent monetary policy.

These measures reversed the macroeconomic conditions prevailing at the end of 2024, when the primary balance showed a deficit of 3.0 percent of GDP, inflation stood at 23.8 percent and the 91-day Treasury bill rate was 27.7 percent. The cedi had also depreciated by 19.2 percent against the U.S. dollar at that time.

Inflation has since fallen sharply. Consumer price growth declined for 13 consecutive months, dropping by 19.7 percentage points from 23.5 percent in January 2025 to 3.8 percent in January 2026. Government also reported that inflation moderated from 23.8 percent in 2024 to 5.4 percent in 2025 before easing further to the current level.

Interest rates followed the disinflation trend. The 91-day Treasury bill rate declined from 27.7 percent at end-2024 to 11 percent for December 2025 and further to 6.5 percent in February 2026.

The average commercial bank lending rate fell from 30.25 percent in 2024 to 20.45 percent in 2025. With inflation now at 3.8 percent, authorities expect lending rates to continue trending lower, reducing government borrowing costs and supporting private sector activity.

Credit to the private sector expanded by GH¢17.1billion in 2025, reflecting improved liquidity conditions and lower rates. Government expects further credit growth in 2026 as financial conditions ease.

Currency stability also improved. The cedi appreciated by 40.7 percent against the U.S. dollar by end-December 2025, reversing the previous year’s depreciation. It also strengthened by 30.9 percent against the pound sterling and 24 percent against the euro.

External balances strengthened alongside fiscal consolidation. The current account recorded a surplus of US$9.1billion in 2025 compared with US$1.5billion in 2024. Gross international reserves rose to US$13.8billion, providing import cover equivalent to 5.7 months.

Economic growth accelerated during the year. Provisional data show real GDP expanded by 6.1 percent year-on-year in the first three quarters of 2025, driven mainly by services and agriculture. Non-oil growth reached 7.5 percent over the same period, up from 5.8 percent in 2024.

The Finance Ministry described 2025 as a period of broad-based macroeconomic turnaround. It said the administration remains committed to sustaining fiscal discipline and structural reforms to consolidate the gains, create jobs and support economic transformation.

Authorities have signalled continued focus on debt sustainability, revenue reforms and prudent monetary coordination to anchor the recovery and limit renewed macroeconomic pressures.

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