As contained in the statement, Fitch Ratings revealed that “We expect the interest-to-revenue ratio will remain broadly stable, at 26% in 2025 and 2026, from 25% in 2024.”

The interest-to-revenue ratio shows how much of a country’s income is being used to pay interest on its debts. A high ratio indicates a large share of revenue is used to service debt. On the contrary, a low ratio confirms that the company has lower debt burden relative to its income.

According to Prof. Isaac Boadi, the Dean, Faculty of Accounting and Finance, Univesrity of Professional Studies, Accra (UPSA), and Executive Director, Institute of Economic and Research Policy (IERPP), the stable projection of interest-to-revenue ratio at 26% in 2025 and 2026, from 25% in 2024 by Fitch Ratings indicates that the government is using 26% of all its income (revenue) just to pay interest on its debts.

Ghana’s 26% interest-income ratio weakens its credit rating because it signals to investors and credit rating agencies that the country is spending too much of its revenue just to pay interest on debt, leaving little room for anything else. A 26% interest-to-revenue ratio means Ghana is operating with a debt chokehold, spending more on past borrowing than on future development. Ghana’s 26% interest-to-revenue ratio significantly weakens its credit rating because it reflects a heavy fiscal burden.

“When over a quarter of the government’s revenue is used solely to service interest payments, it limits the state’s ability to invest in critical areas such as health, education, infrastructure, and public sector wages. This signals to credit rating agencies that the country is in a financially vulnerable position. Moreover, if government revenues decline due to economic shocks or reduced tax collection, Ghana may face difficulty in meeting its debt obligations, increasing the perceived risk of default.

This concern is further intensified when compared to peer countries. While nations rated ‘B’ typically maintain an interest-revenue ratio of 13% and those in the ‘C’ or ‘D’ range average around 16%, Ghana’s 26% is considerably higher. Such a gap portrays Ghana as more fiscally strained than its counterparts. Additionally, this high ratio suggests a dependence on borrowing to fund the budget rather than sustainable revenue generation, pointing to long-term fiscal imbalance.

The result is weakened investor confidence, as lenders become wary of the government’s ability to repay, which in turn raises borrowing costs and prompts further credit rating downgrades. Overall, this ratio underscores a debt-heavy fiscal structure that hampers growth and stability.

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