Ghana’s recent credit rating upgrade by Fitch Ratings masks deeper fiscal vulnerabilities, according to Prof. Isaac Boadi, Dean of the Faculty of Accounting and Finance at the University of Professional Studies, Accra (UPSA).
The finance expert warns that the country’s alarming interest-to-revenue ratio of 26% signals persistent structural weaknesses despite improved market confidence.
While Fitch’s upgrade reflects progress in Ghana’s economic recovery, Prof. Boadi cautions that the nation’s debt servicing costs remain dangerously high compared to peers. Countries with similar ‘B’ ratings typically maintain interest-to-revenue ratios around 13%, while those in more distressed categories average 16%. Ghana’s 26% ratio indicates severe fiscal strain, crowding out critical public spending and perpetuating reliance on borrowing.
“This gap portrays Ghana as more fiscally strained than its counterparts,” Prof. Boadi stated in an analysis cited by The High Street Journal. “Such dependence on borrowing to fund the budget, rather than sustainable revenue generation, points to long-term imbalance.”
The high debt service burden limits the government’s ability to invest in infrastructure, social services, and economic diversification. Prof. Boadi’s assessment aligns with warnings from U.S.-based finance professor Pat Obi, who also emphasized lingering vulnerabilities despite Ghana’s debt restructuring efforts.
Fitch’s upgrade, while positive, primarily reflects short-to-medium-term improvements rather than a fundamental resolution of fiscal challenges. Both experts urge Ghana to prioritize structural reforms—including tax base expansion, public financial management improvements, and strategic investment—to achieve lasting stability.
Without deeper fiscal adjustments, the country risks remaining trapped in a cycle of borrowing to service existing debts rather than fostering sustainable growth.
