Public Debt Surge not driven by exchange rate depreciation alone – Dr Bannor

A Development Economist, Dr Frank Bannor, has questioned claims that the recent sharp rise in Ghana’s public debt is solely the result of exchange rate depreciation, describing the explanation as incomplete and misleading.

Ghana’s public sector debt has increased by more than GH¢70 billion within just three months. Analysts have attributed the surge largely to the cedi’s sharp depreciation against the US dollar in the third quarter of 2025. Data indicate that public debt rose by about GH¢71.6 billion during the period, with projections suggesting total debt could exceed GH¢700 billion by year-end if pressure on the cedi persists.

This increase comes after public debt had declined by GH¢156.4 billion between the first and second quarters of the year, before rising again to GH¢684.6 billion in the third quarter—an increase widely linked to the cedi’s renewed weakness against the dollar.

However, reacting to the figures, Dr Bannor, who is also a Senior Research Fellow at the Institute of Economic Research and Public Policy (IERPP), challenged the assumption that exchange rate movements alone account for the debt increase.

“This public debt data of GH¢71 billion is questionable,” he stated. “I contend that the rise in public debt is not solely due to exchange rate depreciation.”

He drew comparisons with 2022, a year marked by one of the worst performances of the cedi against the US dollar, noting that Ghana’s debt stock increased by about GH¢67 billion (US$7.9 billion) by the end of that year as a result of currency depreciation.

“It is therefore questionable that in the era of so-called better management of the cedi, we would see an increase in public debt of GH¢71 billion within just one quarter,” Dr Bannor argued. “What was the rate of depreciation in the third quarter of 2025 compared to 2022?”

He suggested that the exchange rate narrative may be masking deeper structural issues driving the debt build-up, pointing to high levels of domestic borrowing as a more plausible contributor to the current public debt situation.

“Someone is hiding behind this loose assumption to conceal the true causes of the public debt crisis,” he said, stressing the need for greater transparency and a more comprehensive analysis of the factors behind the rising debt levels.