Ato Forson expresses worry over high-risk premiums on African debt

Finance Minister, Dr. Cassiel Ato Forson, has expressed worry that high-risk premiums are making it costly for African countries to borrow.

He said the elevated risk premiums on African debt are forcing governments, including Ghana, to contract loans at rates far higher than those faced by other regions.

According to him, the high risk premiums have become a central factor in Africa’s rising debt challenges, pushing countries into expensive borrowing that undermines fiscal stability.

Dr. Forson stressed that unless the issue of high-risk premiums on African debt is addressed, the continent will continue to struggle with unsustainable debt burdens.

“African countries are borrowing too expensively. Why should African nations borrow at such high rates compared to their peers in Europe, America, and other parts of the world?” he asked, cautioning that the situation was unsustainable.

He noted that Africa’s total debt has now surpassed one trillion dollars, with more than 20 sovereign states classified as having unsustainable debt by the end of 2024. Servicing this debt, he explained, has become more difficult because of the high risk premiums attached to African borrowing.

Dr. Forson made these comments in Accra after receiving a petition from the African Regional Organization of the International Trade Union Confederation (ITUC–Africa), working in collaboration with the Trade Union Congress (TUC) of Ghana. The petition called for the total cancellation of Africa’s debt.

At the same time, he urged African governments to demonstrate greater accountability and transparency in debt management. He cautioned that the problem was not only about high-risk premiums but also about how borrowed funds are used.

“For me, the use of debt is very important. If we use our debt well, we should be able to pay these debts. But sometimes we do not properly use the debt that we accumulate,” he said.

He added that Africa cannot continue to rely on debt forgiveness while mismanaging loans. He urged trade unions and civil society groups to hold governments accountable for ensuring that debts contracted are used prudently.