Ghana’s public debt reached a substantial GH¢67.5 billion at the close of 2024, equivalent to 5.2% of the nation’s GDP. This figure, as revealed by Finance Minister Cassiel Ato Forson during a parliamentary budget presentation, underscores the significant financial challenges facing the country. A substantial portion of this debt, GH¢21 billion, is attributed to the road sector, highlighting the extensive investments and commitments made in infrastructure development. This accumulation of debt raises concerns about the government’s fiscal health and its ability to manage its financial obligations effectively. The revelation prompted a deeper investigation into the overall arrears situation across various government agencies.
In an effort to gain a comprehensive understanding of the outstanding liabilities, the Ministry of Finance initiated a formal request to all Ministries, Departments, and Agencies (MDAs) on January 28, 2025. The objective was to collect detailed information on all outstanding claims as of the end of 2024. The responses received from the MDAs, coupled with subsequent validation processes, unveiled a staggering total of GH¢67.5 billion owed to government contractors and suppliers. This massive figure paints a stark picture of the government’s mounting financial obligations and the potential strain on its budget.
The breakdown of this substantial debt reveals that GH¢49.2 billion is attributed to outstanding Interim Payment Certificates (IPCs) and invoices from various MDAs. These IPCs represent payments due for completed work or services rendered, while invoices represent bills for goods or services provided. An additional GH¢18.3 billion is tied up in outstanding Bank Transfer Advice at the Controller and Accountant-General’s Department. These represent authorized payments that have yet to be processed and disbursed to the intended recipients. The significant backlog in both IPCs and Bank Transfer Advice suggests inefficiencies in the payment processing system and potential liquidity challenges within the government.
Importantly, the GH¢67.5 billion figure presented by the Finance Minister represents only a portion of the government’s total arrears. It excludes significant debts owed to several key entities. These include a US$1.73 billion debt to Independent Power Producers (IPPs), highlighting the financial strain within the energy sector. Furthermore, the Electricity Company of Ghana (ECG) carries a debt of GH¢68 billion, while the Ghana Cocoa Board (COCOBOD) faces a GH¢32 billion debt burden. The Road Fund also carries a significant debt of GH¢5.75 billion, further compounding the challenges in the road sector. These substantial excluded debts underscore the broader financial pressures facing the Ghanaian economy and the interconnectedness of various sectors.
The accumulation of these substantial arrears across multiple sectors raises serious concerns about the government’s fiscal stability and its ability to meet its financial commitments. The delays in payments to contractors and suppliers can have significant negative consequences, potentially leading to project delays, disruptions in service delivery, and economic hardship for businesses reliant on government contracts. Furthermore, the substantial debts owed to IPPs, ECG, COCOBOD, and the Road Fund pose significant risks to the long-term sustainability of these critical sectors, potentially impacting energy security, agricultural production, and infrastructure development.
Recognizing the urgency and magnitude of the arrears situation, the government has initiated proactive measures to address the issue. A key step is the commissioning of an audit of the accumulated arrears. This audit aims to verify the legitimacy of the claims, ensure value for money in government spending, and prevent any potential irregularities or fraudulent activities. By thoroughly examining the outstanding debts, the government aims to establish a transparent and accountable system for managing its financial obligations, while ensuring that public funds are utilized effectively and efficiently. This audit is crucial for restoring fiscal discipline and ensuring the long-term financial health of the nation.
