ActionAid Ghana has called on the government to actively pursue additional debt cancellation. The organisation advocates for using these freed-up funds to finance climate resilience, renewable energy, and sustainable agriculture initiatives. This urgent appeal comes as Ghana grapples with substantial public debt obligations while simultaneously seeking billions of dollars to meet its climate commitments.
Ghana faces a significant financial challenge, requiring an estimated US$53.3 billion between 2025 and 2035 to implement its updated climate action plan. This plan covers vital sectors such as energy, transport, agriculture, forestry, water, and health. This translates to an average annual requirement of about US$5.33 billion. However, the nation continues to allocate considerable resources to debt servicing, diverting funds from these crucial investments.
The International Monetary Fund (IMF) projects Ghana's total public debt service at approximately US$13.19 billion in 2026. The 2026 Budget further anticipates about GHS 57.7 billion in interest payments alone. This substantial financial burden limits the government's capacity to invest in productive sectors and provide essential public services. ActionAid highlights that debt repayments increasingly restrict developing countries' ability to improve livelihoods and strengthen resilience against climate shocks.
John Nkaw, ActionAid Ghana Country Director, emphasised the severe impact of debt repayments. He stated that a growing portion of government resources is unavailable for investment in the economy's productive sectors. Nkaw explained that this pressure extends beyond climate projects, affecting health, education, water systems, and social services. Vulnerable households often bear the brunt when governments are forced to tighten spending due to fiscal constraints.
Nkaw cited ActionAid figures showing Ghana's external debt repayments equalled about 9.2 percent of national revenue. This figure compares to approximately 8.2 percent spent on health. He argued that committing large revenue portions to debt repayments leaves less money for strengthening health systems and supporting communities already exposed to climate shocks. The fiscal pressure can also lead to austerity measures, impacting service costs and burdening poorer households.
These concerns are reinforced by ActionAid's recent report, 'Debt Fuels the Climate Crisis: How the Finance Flows'. This report examined public revenues, debt repayments, national budgets, and climate plans across 65 climate-vulnerable countries. The findings reveal that these countries spend nearly 25 times more on debt repayments than on climate action. Debt servicing consumes about 65 percent of their combined government revenue. The report also notes that 93.5 percent of these countries are either in debt distress or at significant risk.
Nkaw pointed out that this imbalance delays climate action across developing nations. He noted that debt is a crippling financial problem, causing climate actions to be delayed, reduced, or dependent on additional loans. The problem is compounded by the structure of international climate finance, where about two-thirds of funds from wealthy countries come as loans, not grants. This creates a cycle where climate disasters force borrowing, debt repayments reduce resilience funds, and countries become more exposed to future shocks.
ActionAid urges Ghana to push more strongly for debt relief. Nkaw called on creditor countries and institutions to consider deeper debt cancellation for vulnerable developing economies. He believes this would provide governments with greater fiscal space to invest in climate action and productive sectors. Nkaw stressed that it is only just for creditor institutions to grant debt cancellation to poor countries facing climate change vulnerabilities.
Nkaw also advocated for stronger international rules governing sovereign debt. He suggested a framework that would compel a broader range of creditors to participate in restructuring arrangements. Such reforms could give countries more flexibility to redirect resources towards climate action. For Ghana, Nkaw specifically recommended channelling some of this fiscal space into renewable energy. He urged the government to intensify the implementation of its existing renewable energy strategy, particularly in solar energy. Agriculture is another sector Nkaw wants prioritised, calling for increased investment in climate-sustainable agriculture.