I watched Dr. Mahama Tiah Abdul-Kabiru on Newsfile assert that the current administration is “reaping the fruits” of the Domestic Debt Exchange Programme (DDEP).

As an Analyst, I find this comment very intriguing. The DDEP should not be framed as a policy success story or an achievement to celebrate. Rather, it was an extraordinary emergency measure taken by the NPP administration to stabilize an economy that had become severely distressed after years of unsustainable debt accumulation and macroeconomic mismanagement. The fact that Ghana had to resort to a domestic debt restructuring in the first place, reflects the depth of the crisis the country found itself in. DDEP is therefore not a strategic policy innovation whose supposed benefits should be proudly claimed.

Ghana should never have been in a position where such a drastic intervention became necessary. By 2022, the country’s fiscal and debt indicators had deteriorated sharply. Public debt had risen to unsustainable levels relative to GDP and government revenue, while interest payments consumed a growing share of the national budget. Domestic bonds carried extremely high coupon rates, often approaching or exceeding 19%, which placed an enormous burden on public finances.

At the same time, Ghana lost access to international capital markets and eventually defaulted on most of its external obligations in December 2022. Inflation surged, the cedi depreciated sharply, and fiscal deficits widened significantly. These indicators clearly showed that the macroeconomic framework had become unstable, leaving the your administration with very limited options beyond seeking an IMF programme and restructuring domestic debt through the DDEP.

The DDEP itself came with significant costs to the economy. It imposed losses across the financial system and affected multiple stakeholders, including the central bank, commercial banks, pension funds, and ordinary investors. The Bank of Ghana reported a loss of about GH¢60.8 billion in 2022, with roughly GH¢53 billion of that figure attributed to the impairment of government securities following the debt exchange.

These losses occurred because the restructuring reduced coupon payments and extended maturities on bonds held by the central bank, forcing it to write down the value of those assets under international accounting standards.

The banking sector also absorbed substantial damage. Ghanaian banks collectively recorded billions of cedis in losses linked to the restructuring of domestic government bonds. Capital buffers were eroded, forcing regulators to allow institutions additional time to rebuild their balance sheets.

In many cases, banks had to reassess their risk exposure to sovereign debt, which historically had been treated as a safe asset. The restructuring therefore not only affected bank profitability but also constrained the capacity of financial institutions to extend credit to businesses and households during a period when economic recovery required stronger private-sector financing.

The effects were also felt by investors and pension funds. The DDEP resulted in reduced coupon rates and longer maturities for government bonds, which significantly lowered the present value of these investments.

For many pension funds, asset managers, and individual bondholders, this meant accepting lower returns than originally expected. In practical terms, retirees and investors who had invested in government securities as stable long-term assets saw the value of those investments decline. The broader implication was a loss of confidence in domestic government bonds as risk-free instruments, a development that could raise borrowing costs for the government in the future.

Moreover, the consequences of the DDEP will continue to affect Ghana’s financial system for years to come. Although the restructuring reduced immediate debt-servicing pressures, the government still has to honor payments on the restructured instruments over time. Large coupon payments remain part of the fiscal landscape, and the economy must continue to navigate the longer maturity profile of the exchanged bonds. Meanwhile, the Bank of Ghana will need time to rebuild its balance sheet strength following the impairment losses recorded during the restructuring process. These are not trivial adjustments; they represent structural effects that will shape fiscal and monetary policy for the foreseeable future.

For these reasons, the DDEP should be understood as a painful corrective measure rather than a policy accomplishment. A useful analogy is that of a household that restructures its loans after falling into financial distress. While the restructuring may prevent immediate default, it does not represent financial success. It merely reflects the need to repair the consequences of earlier financial mismanagement. In the same way, Ghana’s domestic debt exchange was necessary to stabilize the economy after a severe fiscal crisis, largely caused by reckless borrowing and mismanagement. It should never be presented as something from which policymakers proudly claim dividends.

The real policy lesson from this episode is the importance of prudent debt management and disciplined fiscal governance. Governments must ensure that borrowing remains aligned with revenue capacity and long-term growth prospects. Persistent fiscal deficits, unchecked debt accumulation, and reliance on expensive borrowing instruments can quickly undermine macroeconomic stability. Avoiding future crises requires stronger fiscal discipline, transparent economic management, and a commitment to sustainable public finances.

Ultimately, the DDEP reminds us of the high price that economies pay when fiscal prudence is neglected. The losses absorbed by the Bank of Ghana, the financial sector, and investors across the country illustrate that debt crises rarely occur without widespread economic consequences. Ghana must therefore treat the experience not as a success story but as a cautionary lesson. Never again should the country be recklessly managed to the point where a domestic debt restructuring programme becomes necessary.