Goethe’s Faust remains one of the most haunting works I’ve read. It portrays a man trading his soul for fleeting relief. Ghana’s DDEP, too, bears the mark of a Faustian bargain, salvation in the form of short-term fiscal breathing space, bought at the hidden price of weakened banks and shaken investor confidence. The Mephistopheles (the main antagonist) of urgent necessity who was once disguised as saviour, now exacts his due, leaving a financial sector stripped of strength and a lasting shadow over the sovereign bond market.
In the labyrinth of Ghana’s fiscal journey, the Domestic Debt Exchange Programme (DDEP) emerges as both monument and mirage. The program, which was announced in December, 2022 and executed with unflinching urgency by early 2023, restructured approximately GH¢203 billion of domestic bonds, which without doubt was the single largest financial engineering feat in Ghana’s post-independence history. What policymakers framed as a technical adjustment quickly unfolded into an economic drama, which was less a routine balance sheet exercise than a full theatre production, with citizens as the unwilling audience, banks cast as reluctant actors and creditors watching from the wings to see if the script might collapse mid-performance. In its wake, average coupon rates on restructured bonds were cut by more than half, maturities extended far into the horizon and the government’s relief was almost palpable as debt-service-to-revenue ratios fell from an eye-watering 117% in 2022 to a projected below 18% by 2028 according to the Ministry of Finance debt sustainability analysis.
But as in Shakespeare’s Merchant of Venice, a pound of flesh is never freely waived (permit me this Shakespearean borrowing). Relief has been bought, undeniably, but not without consequence. History’s unblemished lessons remind us that in public finance, salvation often wears a twin mask and peril is the other face. Underneath the glow of fiscal reprieve lurk daunting shadows with recapitalization costs projected at over GH¢41 billion, compensation claims by pension funds and a financial sector whose capital adequacy has been gashed from double digits to the very edge of regulatory survival. Ghana has indeed grasped mercy’s hand, but the bond remains, demanding careful honour lest salvation itself turn to penalty.
Thus, it is pretty obvious that the DDEP is either Ghana’s phoenix rising from the ashes of unsustainable debt into fiscal renewal or a carefully disguised time bomb with ticks timed to the cadence of hidden deficits and external shocks (this is unquestionably a binary outcome for Ghana). For even as debt service was trimmed by nearly 5 percentage points of GDP, the fiscal deficit still casts a watchful shadow, projected around 3.8% to 3.9% of GDP for 2025. External reserves, hovering near $6.8 billion, provide roughly 4.5 months of import cover, presenting a measure of comfort though still vulnerable to shocks. Inflation, once a fiery spectre at 54%in December, 2022, has eased into the lower 20s by mid-2025, though its lingering presence continues to haunt households and investors alike.
The DDEP is therefore no mere technical adjustment but a stage on which Ghana’s economic drama unfolds. This appears as one where sovereign resolve, market confidence and institutional resilience must perform in synchrony or risk watching stability unravel into fragility. In crafting my metaphor-laden article, I sought not flourish for its own sake but to fuse the hard edges of fiscal numbers with the soft threads of mythology and metaphor, for the very stakes are theatrical as lives, institutions and credibility stand in the balance and the stage of economics permits no understudies.
Impact Forged in Fiscal Alchemy
That alchemy, which transfigured GH¢203 billion of domestic securities, was no mere sleight of hand. With one stroke, coupons once dancing above 19% collapsed into the single-digit corridors of 9% to 10%. Maturities, once a short and punishing 3.8 years, were stretched taut into horizons of 8 years and beyond, as though the very fabric of time had been rewoven to ease the sovereign’s breathing.
In the short run, relief was undeniable. Debt service savings of some GH¢61 billion in 2023 gave government the fiscal oxygen it craved. The applause was deserved, for without this reprieve, consolidation would have suffocated before it began.
However, as history whispers, every reprieve conceals a reckoning. Pension funds, initially exempt, were later folded into the exchange, under terms distinct but no less binding. Financial institutions, for their part, found themselves clasping bonds that yield too little and stretch too long with interest rate mismatches sharpening like blades, liquidity buffers thinning into frailty. What was hailed as salvation carried in its train the silent tread of peril, not unlike a Trojan horse, welcomed at the gates as deliverance, but harbouring burdens that only reveal themselves once safely within the citadel of finance.
Thus, the DDEP is not an epilogue but an act within the ongoing drama. It is at once relief and restraint, oxygen and chain. And if it becomes Ghana’s phoenix rising or a time bomb ticking beneath its fiscal edifice depends not on the swap alone, but on how deftly the nation honours this bond of survival.
The Social Cost of Fiscal Salvation
Although the DDEP is completed, its after-shocks still hum through Ghana’s public finances like tremors that refuse to fade after the quake. The government’s fiscal deficit target for 2025 has been revised downward to 3.8% of GDP, from an earlier aim of 4.1%. By mid-year the deficit was about 1.1% of GDP, a performance that exceeded expectations but did not heal deeper fissures.
The hidden structural bones rattle beneath the surface. Recapitalization and compensation claims from pensions grow heavy. Liabilities of state-owned enterprises (SOEs) press like old chains. Refinancing risk, longer bonds though they are, still courts the storms of inflation, interest and rollover demands.
Social spending is under siege. Education, for instance, has fallen as a share of GDP, down from 3.72% in 2019 to 3.12% in 2024. Meanwhile its slice of government expenditure rose slightly in 2024 but remains shy of declared targets. Health fares no better as budgeted allocations to the health sector in 2024 amounted to GH¢16.2 billion, roughly 1.55% of GDP, placing Ghana far below World Health Organization benchmarks for universal health coverage.
Capital expenditure, once a scaffold of growth, creaks under pressure. In 2024, gross fixed capital formation was about 9.8% of GDP. However, the mid-year 2025 figures show capital projects being under-utilised as when obligation of debt payments, hidden liabilities and and servicing costs consume budget headroom, what remains for bridges, clinics, schools and asphalted roads grows slender.
It is the Promethean paradox, from Greek mythology, of Ghana’s fiscal salvation. And just like Prometheus stealing fire for humanity, short-term relief brings light and hope, but the cost is relentless and exacting. And like Sisyphus, also from Greek myth, condemned to eternally push his boulder uphill, the state labours against the weight of obligations, social needs and debt service, never fully reaching the summit. Each fiscal year rekindles the fire of hope, but the strain on citizens, institutions and credibility persists, a relentless echo of these ancient myths.
The $10b Big Push and the Shadow of Debt Relief
If the DDEP was a scalpel that cut away the gangrene of unsustainable coupons, then the Big-Push is the patient’s bold promise to run again. Announced as a US$10 billion investment in roads and transport arteries, it gleams like a lighthouse on Ghana’s fiscal horizon, which is a vision of highways and bridges as the veins through which commerce and opportunity might flow.
Nonetheless, every lighthouse is tested by the storm. The same tremors of hidden deficits, compensation costs and SOE liabilities that the DDEP left behind ripple into the Big Push. Debt relief has created breathing space, but the air is still thin. The promise of new asphalt must contend with the pull of old obligations as the dream of connectivity must share oxygen with pensions, health budgets and education financing.
Nevertheless, the symbolism is powerful. The Big Push reminds us that debt restructuring is not an end in itself but a gateway. If the space carved by the DDEP can be guarded against relapse and if it is channelled into durable assets that outlive the cycle of fiscal storms, then the Big Push could become the most visible proof that sacrifice in the bond markets translates into prosperity on the ground.
This is also the paradox, as infrastructure ambitions must hinge on fiscal discipline. Roads without balance sheets are like wings of wax which are radiant in ascent but fragile against heat. The Big Push, therefore, is not merely a programme of asphalt and steel. It is the country’s test of whether the scars of the DDEP can be turned into sinews of resilience.
The Silent Price of Macroeconomic Salvation
Economies are not gentle seas. They are storm-swept oceans and every policy gust sent from the helm ripples into distant coves of households, banks, exporters, importers. In Ghana, those winds have howled with force between 2023 and 2025.
Headline inflation, once a furnace burning above 50% in late 2022, has cooled into the low teens. By August, 2025 it had dropped to 11.5%, the lowest since October, 2021. Food inflation, which drove much of the early inflationary blaze, has pulled back as non-food inflation and core inflation, though, remain elevated and jittery, close to 20% to 25%, still threatening second-round effects.
The BoG has responded. The policy rate, which in March, 2025 was raised to 28% to stem inflation that was refusing to bow, was eased in later months as inflation cooled. In July, 2025 the Monetary Policy Committee cut rates by 300 basis points to 25%, citing improvements in macroeconomic conditions, stable inflation expectations and external buffers that were showing signs of resilience. Then in mid-September, 2025, another cut of 350 basis points brought the rate down further to 21.5%, a record easing move.
Exchange rates, always a barometer of confidence, have danced wildly. Between 2022 and 2024, the Ghana Cedis depreciated against the US Dollar by over 19% annually notably, 30.0% in 2022, 27.8% in 2023 and still about 19.2% in 2024. However, in early 2025 a modest recovery emerged and by May, 2025 the Ghana Cedis had appreciated to about GH¢13.47 per USD, up from much weaker levels in late 2024, imparting some short-lived relief to importers and consumers.
Producer price inflation (PPI), the hidden tinder beneath headline inflation, has also eased but remains scorching. In March, 2025 it stood at 24.4%, down from 27.6% in February. The Mining and Quarrying sector saw PPI as high as 35.4%, even as the Manufacturing sector hovered around 22.8%.
Once put to the test in the macroeconomic crucible, these figures exacerbate vulnerabilities. High inflation erodes real incomes, fuelling wage demands and pressuring firms to raise prices. High policy rates squeeze the cost of borrowing, throttling investment, particularly in sectors reliant on domestic credit. Exchange rate instability raises the cost of imports (fuel, raw materials), stoking inflation anew and burdening public and private actors who rely on foreign inputs. Banks suffer from mismatches as longer durations, lower coupon yields, risk of default. Households hurt hardest.
The DDEP did not just rearrange maturities. Factually, it rewired the very arteries of the banking system. Banks live off spreads, borrowing short from depositors and lending long to governments and firms. In normal times this works but in times of shock, it becomes a trap.
Duration mismatch leaves banks holding bonds that stretch far into the horizon, even as their depositors demand cash today. When inflation gallops and interest rates climb, those bonds turn into lead weights, too sluggish to keep pace with the new price of money.
Yield mismatch compounds the wound. Locked into old securities with coupons struck in calmer days, banks must watch as fresh issuances provide richer returns. The result is a balance sheet heavy with assets that pay too little against liabilities that cost too much.
And disturbingly, within it all lurks credit risk. Once the state itself chooses restructuring as an escape hatch, what was once the safest asset in the land becomes a contested promise. For banks, the mismatch is no longer just arithmetic. It is existential, a reminder that sovereign paper can turn from shield to sword in the span of a policy cycle.
Thus, the DDEP, though a grand manoeuvre, sits amid this turbulent climate. It helped lower coupon burdens and extended maturities, but the transmission channels remain active. Fresh wind in policy rates, even when easing, must counter inflation firmly held in expectations. Exchange rate gains can unravel if reserves falter or external shocks surge. Vulnerabilities in PPI implicate core inflation, which again pressures monetary policy. Every indicator is a note in Ghana’s macroeconomic symphony, with some being harmonious and others discordant.
IFRS 9’s Crystal Ball and the Machinery of Expected Losses
A surgeon’s job is never truly done as with every incision a new scar is made. In the delicate theatre of Ghana’s economy, IFRS 9 and the DDEP are a scalpel and microscope carving away immediate burdens, simultaneously also revealing deeper unseen vulnerabilities. Their work is a painful necessity, a forced reckoning that scars in the short term but promises, perhaps, a healthier skeleton beneath the flesh.
If the DDEP was the scalpel, IFRS 9 remains the microscope forcing banks to peer into the uncertain bloodstream of their loan portfolios. Gone are the days when impairments could be delayed until default knocked audibly at the door. Under IFRS 9 losses are no longer shadows waiting in the corridor as they are anticipated guests ushered into the books before they even arrive.
This forward-looking standard has demanded that Ghanaian banks build models not only from past data but also from forward gazes such as GDP projections, inflation trajectories, interest rate expectations and even the policy moods of government. In literary terms, it is as if IFRS 9 compels banks to read tomorrow’s weather in today’s clouds.
The stress is evident as industry reporting indicates DDEP/IFRS 9 related impairments of roughly GH¢19.4 billion across universal banks in 2023 (with some estimates for smaller samples closer to GH¢17.1 billion). In the same year the sector’s non-performing loan ratio climbed from 16.6% to 20.6% while capital adequacy eroded from 16.2% to 13.9%, a bruising that scarred profit lines and forced supervisory forbearance. Nonetheless, paradoxically it is this very pain that births resilience as by confronting the spectre of default in advance, banks are less likely to be blindsided when macroeconomic squalls sweep across their balance sheets.
Torch in Hand Through the Policy Labyrinth
If the DDEP is to be remembered as a bridge and not a detour, policy must hold steady hands at the tiller. Fiscal anchors must be hammered deep, for without firm moorings the ship of state risks drifting once more into deficit storms. Medium-term targets for the deficit and primary balance must not remain ink on paper, for they are the ballast against the old tides of indiscipline, akin to Ariadne’s thread in Greek myth, spun to guide Theseus from the labyrinth after slaying the Minotaur, a lifeline the state too must grasp to steer out of its debt maze and away from the monster of default.
Revenue, too, must be rekindled. Ghana’s tax-to-GDP ratio still lingers below 14%, far short of peers on the continent. Without broadening the base, tightening compliance and sealing leakages, the nation merely patches holes in a leaking vessel. Domestic mobilization is not a slogan; it is survival.
The shadows of contingent liabilities must be dragged into the open. State-Owned Enterprises, pensions and banking rescues are fiscal mines buried under the surface. Transparency here is not ornamental but it is the lantern in Ghana’s financial catacombs, revealing dangers before they detonate.
Buffers, once dismissed as luxuries, must be treated as shields. Sinking funds, reserves and credible monetary policy are the armour against global shocks like a collapse in cocoa prices, a spike in oil, or the tightening grip of global interest rates. Without them, the next tempest will again leave the economy bare.
Finally, Ghana must learn to borrow with discernment. To lean too heavily on domestic markets, even after restructuring, is to place the same fragile branch under heavier weight. Diversified funding such as concessional loans, careful external issuance and disciplined liability management is the safer path. For in finance, as in life, overreliance is the seed of fragility.
The DDEP has provided oxygen, but oxygen alone is not life. It must be channelled through arteries strong enough to carry it and through policies resolute enough to prevent relapse. Otherwise, today’s reprieve becomes tomorrow’s relapse and the phoenix risks falling back into ash.
Conclusion
The Domestic Debt Exchange Programme was obviously no ordinary policy stroke. It was both scalpel and script, cutting deep into the architecture of public finance while staging a drama whose consequences will unfold for years. Coupons have been lowered, maturities lengthened and fiscal breathing space momentarily restored. These, however, are but opening lines in a longer play.
What will matter is if the state nurtures credibility through disciplined revenue growth, curbs the appetite for reckless borrowing and grounds reforms in institutions rather than personalities. Should that happen, Ghana may well take the form of a phoenix, its wings reforged not in wax but in tempered steel, rising from the ashes of fiscal crisis to reclaim economic sovereignty. Otherwise, the risk remains that our posture mirrors Icarus, (a metaphor I borrow from Robert Ludlum’s Icarus Agenda, one of my all-time favourite novels), radiant in ascent but doomed by fragile wings, a spectacle both dazzling and tragic. And here, the old counsel of Daedalus in Greek mythology still whispers across the centuries, reminding us not to fly too close to the sun nor too near the sea, but instead to chart a steady middle path.
Thus, the DDEP, though behind us in execution, remains ahead of us in consequence. It is the hinge on which Ghana’s economic future turns, demanding vigilance from citizens, sobriety from policymakers and an honest reckoning with the costs of past profligacy. The theatre continues and the audience such as markets, creditors and ordinary Ghanaians waits to see if this drama ends in rebirth or in another fall from the sky.
Sources
Bank of Ghana, Public Debt Report (2024)
Bank of Ghana, Financial Stability Review (2023)
Bank of Ghana, Monetary Policy Committee Press Releases (2023 – 2025)
Ghana Statistical Service, Consumer Price Index and Inflation Reports (2022 – 2025)
Ghana Statistical Service, Producer Price Index (2025)
International Monetary Fund, Debt Sustainability Analysis (2023)
International Monetary Fund, Article IV Consultation on Ghana (2023)
Ministry of Finance, Domestic Debt Exchange Programme (DDEP) Reports (2023)
Ministry of Finance, Budget Statements & Economic Policy (2023, 2024)
PwC Ghana, 2023 Banking Survey
World Bank, Ghana Economic Update (2024)