Ato Forson justifies early DDEP repayment, projects GH¢1bn in interest savings

Government expects to save about GH¢1 billion in interest payments by bringing forward the repayment of GH¢29 billion in principal under the Domestic Debt Exchange Programme (DDEP).

The early repayment is expected to ease pressure on public finances as Ghana prepares for major debt maturities in 2027.

Presenting the 2027 Budget to Parliament on Thursday, November 12, Finance Minister Dr. Cassiel Ato Forson announced an early redemption offer for holders of the DDEP bonds due on February 16, 2027.

The offer, which took effect on November 12, allows bondholders to collect their principal before the scheduled maturity date.

Speaking on the Citi Breakfast Show, Dr. Forson explained that the decision was driven by the need to manage the concentration of debt repayments falling due next year and avoid another default.

He said Ghana faces about GH¢111 billion in debt obligations, with significant repayment pressures concentrated in 2027 and 2028.

“If you look at our debt profile, you see that the two are like mountains there, and everything else is stable. So, in a normal year, you pay about GH¢5 billion, GH¢5 billion, and then in one year, GH¢40 billion. So, what do you do to meet that GH¢40 billion? You need to plan,” he said.

When asked by host Bernard Avle whether government would also pay the interest ahead of schedule, the Finance Minister clarified that the early redemption covers the principal, not the interest.

“No, I’m not paying the interest earlier. But if I pay you the GH¢29 billion, then I will save about GH¢1 billion in interest,” he explained.

Government says it has accumulated GH¢29 billion in the Cedi Sinking Fund, sufficient to cover the February 2027 principal obligation.

However, it is still building additional buffers to meet the GH¢11.1 billion interest payment due on the same date.

The February maturity forms part of approximately GH¢53 billion in DDEP principal and interest obligations falling due across February and August 2027.

Beyond the domestic debt repayment, government also plans to settle a US$590 million Eurobond obligation due on January 2, 2027, before the end of this year.

The two early repayments are expected to reduce the immediate debt repayment burden entering 2027.

Dr. Forson said government was also introducing financing and borrowing reforms to ensure that future debt obligations are planned for and met without exposing the country to another debt crisis.

CitiNewsRoom