By Bernard Yaw ASHIADEY & Ebenezer Chike Adjei NJOKU
Persistent failure, particularly by state-aligned entities, to honour contractual obligations is raising concerns among investors, with the United States America (U.S.A.) government signalling caution over future financing for key projects if the pattern persists.
U.S. Ambassador to Ghana, Virginia Palmer – who raised the concern, lamented that outstanding arrears and uncertainty over government payments are undermining investor confidence and could limit future partnerships between Ghana and American firms.
Speaking to journalists in Accra, Ambassador Palmer underscored the risks associated with non-payment for services and projects, particularly in sectors that rely on international financing.
“The non-payment of arrears and the sovereign credit rating affect financing. The Development Finance Corporation (DFC), which has nearly a billion dollars invested in Ghana, is currently hesitant to undertake projects that involve direct government engagement,” she stated.
Concerns over Ghana’s ability to meet its financial commitments have been mounting in recent years.
At the end of December 2024, gross central government and guaranteed debt reached GH¢726.7billion, from GH¢610billion in 2023 – with almost 40 percent being external.
The sharp rating downgrades in 2022 and 2023 and subsequent implementation of the Domestic Debt Exchange Programme (DDEP) only served to shatter Ghana’s reliability in the eyes of investors.
During the 2025 budget presentation, Finance Minister Dr. Casiel Ato Forson disclosed that the country faces payments of approximately GH¢150.3billion over the next four years.
Beyond domestic maturities, considerable external debt service commitments totalling US$8.7billion over the same period – equivalent to 10.9 percent of GDP – exist.
These external obligations are heavily concentrated in 2027 and 2028, potentially creating fiscal pressure points in the medium-term.
The issue reached a crescendo when Ranking Member of the US Senate Committee on Foreign Relations, Senator James E. Risch, made formal moves for America to use its position as the International Monetary Fund’s (IMF’s) largest shareholder to pressure Ghana into repaying debts owed US companies.
Senator Risch pushed for Ghana’s debt repayment to American entities to be a precondition for US support of further IMF assistance to the country under the current US$3billion programme.
The U.S. Ambassador stressed that delayed payments have a direct impact on investor decisions, particularly for firms seeking financing in major infrastructure projects.
“It is important for government to know that new investors call their friends to know if it is a great place to invest. They might say: ‘It is a nice place to stay, it is peaceful, it’s democratic – but I am owed hundreds of millions of dollars’,” she said.
“No company can face their shareholders with that kind of liability. And it has gotten to the point now where it puts a brake on further investments. And Ghana’s government acknowledges this and is open to creative solutions. There are companies waiting to invest, but they are looking to see if the recovery remains on course and if their friends are paid. It is hard to quantify opportunities lost when the environment is not good,” she added.
The U.S remains one of Ghana’s key economic partners, with bilateral trade between the two countries valued at approximately US$2.1billion in 2024, according to government data.
However, the reluctance of institutions such as the DFC to engage in new projects underscores the broader challenge facing Ghana’s investment climate.
Ambassador Palmer pointed to a promising partnership between U.S. nuclear firm NuScale and Ghanaian company Regnum to develop small modular nuclear reactors.
While the project presents a potential breakthrough for Ghana’s energy sector, its success depends on securing financing mechanisms that do not rely on direct government guarantees.
“These reactors, which are safer and more cost-effective than traditional nuclear plants, have a financing model where the offtaker – not government – pays for the energy generated. This approach mitigates risks for investors concerned about sovereign debt issues,” she explained.
Industry stakeholders argue that Ghana must take immediate steps to restore confidence in its contract enforcement mechanisms. Business associations have repeatedly called for government to prioritise clearing outstanding arrears to contractors and service providers.
In a recent report, the Ghana National Chamber of Commerce and Industry (GNCCI) warned that contractual breaches are not only affecting foreign investors but also harming local businesses which depend on timely payments from the state.
Ambassador Palmer’s comments align with concerns raised by local industry players, who stress that contract sanctity is essential for Ghana’s economic recovery.
Government has yet to formally respond to the U.S Ambassador’s remarks, but officials have previously assured the business community that efforts are being made to improve payment structures and resolve outstanding debts.
The Ministry of Finance has also committed to strengthening fiscal discipline as part of the country’s ongoing IMF-backed economic reform programme.
