Finance Minister, Dr. Cassiel Ato Forson, has raised alarm over the elevated risk premiums imposed on African debt, warning that the trend is driving up the cost of borrowing for economies across the continent, including Ghana.
According to him, African countries are compelled to secure loans at significantly higher rates than their peers in other regions—a situation that undermines fiscal stability and worsens debt vulnerabilities.
Also Read: No-fee-stress: Nursing trainee admission fees slashed by 50%
Africa’s total debt has now surpassed one trillion dollars, with more than 20 sovereign nations classified as having unsustainable debt by the end of 2024. Dr. Forson explained that this financing burden remains a major factor behind the continent’s repeated surges in debt-to-GDP ratios.
Expensive loans
He stated: “I think the time has come for us to also pay attention to what constitutes the debt service as a percentage to revenue. This is largely because we are borrowing too expensively. Why should African countries borrow so expensively compared to their peers in other parts of the world?
Why should the risk premium for African countries be so different from Europe, America and other parts of the world?”
He added: “And because we are borrowing so expensively, we have little debt, but the debt servicing cost is so expensive.”
Dr. Forson made these remarks in Accra after receiving a petition from the African Regional Organization of the International Trade Union Confederation (ITUC–Africa) in collaboration with the Trade Union Congress (TUC) of Ghana, which is advocating for the total cancellation of Africa’s debt.
At the same time, he urged African governments to demonstrate greater accountability and transparency in the management of public debt.
He cautioned: “For me, the use of debt is also very important. If we use our debt well, we should be able to pay these debts, and sometimes we also don’t properly use the debt that we accumulate.”
He further stressed: “We can’t forever be asking for debt-forgiveness if within us when we get this debt, we misuse it. So it is also important that TUC put pressure on governments to be transparent in accounting for their debts and to use this debt well.”