By Ebenezer Chike Adjei NJOKU
President John Dramani Mahama has assured the nation of his administration’s commitment to restoring macroeconomic stability and steering the country toward growth, despite what he described as a dire financial situation inherited from the previous government.
Addressing parliament during the 2025 State of the Nation Address (SONA), Mr. Mahama said while it is necessary to be honest with stakeholders concerning the true state of affairs, he is not seeking an escape route from promises he made on the campaign trail.
He subsequently outlined a series of fiscal measures aimed at reducing the debt burden, rebuilding reserves and restoring investor confidence.
“Notwithstanding the gloomy background, I remain committed to leading this government; taking every necessary step to reset our economy, getting things back on track and working with the good people of our country to build the Ghana we want,” he said.
“With the transparent and prudent measures we have implemented since taking over the administration of this country, I urge my countrymen and women, business owners and foreign investors to trust our competence in turning our economy around,” he added.
Prior to that, the president painted a grim picture of the national financial position; describing it as “a country that is broken on many fronts”.
Despite extensive domestic and foreign debt rework, official figures showed that the debt stock currently stands at GH¢721billion, with additional liabilities from State-Owned Enterprises (SOEs).
The usual suspects include Electricity Company of Ghana (ECG) which alone owes GH¢68billion, while the Ghana Cocoa Board (COCOBOD) is saddled with a GH¢32.5billion debt – and GH¢9.7billion of the latter’s debt is due for repayment by end of September 2025.
The energy sector, too, faces a GH¢34billion financing shortfall, with legacy debt in excess of US$2.5billion.
“The repercussions of reckless debt accumulation and economic mismanagement will require extensive work and sacrifice to repair,” Mr. Mahama told parliament.
He pledged to implement strict fiscal discipline and prudent debt management strategies to stabilise the economy and avoid further financial distress.
At the heart of Mr. Mahama’s economic recovery plan is the confidence that comes from the timely settlement of obligations, with a focus on restoring buffers in the Sinking Fund – a dedicated reserve for managing debt obligations.
The president confirmed that his administration has honoured GH¢6.081billion of domestic debt coupon payments in cash and GH¢3.46billion in kind during February 2025, while also building reserves to meet upcoming debt maturities in July and August.
“We have also built additional buffers in the Sinking Fund to honour maturing DDEP bonds due in July and August,” he stated.
In contrast, he criticised the previous government’s handling of debt, highlighting a drastic depletion of the Sinking Fund.
While the government before him had claimed to leave sufficient buffers for debt repayment, Mr. Mahama countered this assertion with figures from the Debt Service Reserve Account, which showed a balance of only US$64,000 and GH¢143million in foreign and local currency reserves respectively.
“This is in stark contrast to our actions of 2017 before we left office, when we allocated US$250million to the Sinking Fund to service debt,” Mahama noted.
The scale of debt servicing over the next four years remains significant, amounting to GH¢280billion – an average of GH¢70billion per annum.
This comprises GH¢150billion for domestic debt and GH¢130billion for external debt repayments. The president stressed that while these obligations pose a challenge, his administration is committed to meeting them without exacerbating the debt burden.
Macroeconomic stability and fiscal consolidation
President Mahama highlighted early signs of improvement in monetary policy, pointing to declining Treasury bill rates as evidence that investor confidence is gradually returning.
Since assuming office in January, government witnessed strong demand for its short-term instruments as reflected in the weekly oversubscriptions.
Consequently, the state has reduced the 91-day Treasury bill rate from 28.51 percent to 24.48 percent, while the 364-day Treasury bill rate fell from 30.41 percent to 27.3 percent.
“Our prudent debt management practices have led to a substantial reduction in interest rates,” he argued.
In addition, Mr. Mahama confirmed that his administration has signed a Memorandum of Understanding (MoU) with the Official Creditor Committee (OCC) to formalise agreements on debt treatment.
“This marks a crucial step toward Ghana’s restoration of long-term debt sustainability,” he noted, adding that the agreement will provide much-needed financial space to support economic recovery.
COCOBOD and the cocoa sector crisis
The president also drew attention to challenges facing COCOBOD, particularly the impact of a contract rollover decision taken by the previous administration that has resulted in significant revenue losses for Ghanaian farmers.
“In the 2023/2024 crop season, COCOBOD could not supply three hundred and thirty-three thousand seven hundred and sixty-seven (333,767) tonnes of cocoa, which it sold at US$2,600 per tonne. As a result, the then management of COCOBOD rolled over these contracts into the 2024/2025 cocoa season,” he explained.
According to Mahama, this decision has caused a revenue loss of US$840million so far, with an additional US$495million in losses expected as the remaining contracts are fulfilled. “This implies that for every tonne of cocoa delivered this year in fulfilment of the rolled-over contracts, COCOBOD and the Ghanaian farmer will lose US$4,000 in revenue,” he added.
Toward an inclusive economic recovery
Despite the economic situation’s gravity, Mr. Mahama expressed confidence in Ghana’s ability to recover through fiscal discipline, debt restructuring and structural reforms.
His administration is also working toward completing the IMF-supported programme’s fourth review, scheduled between April 2 and April 15, 2025, with expected approval from the IMF Executive Board in June 2025. He however did not give any hint of possibly seeking fresh terms from the IMF.
As part of his strategy to build consensus on economic reforms, the president confirmed that his government will host a National Economic Dialogue to deliberate on key policy priorities.
“Consultation and consensus building have always proven to be better than unilateral decision-making,” he remarked, urging opposition parties to participate in the process.
The president also reiterated his government’s commitment to creating a fair and equitable economy, stating: “The goal is prosperity for all, which must be shared and not the prerogative of a select few”.
