Ghana will not receive foreign assistance from the United States under the Millennium Challenge Compact (MCC) for the 2026 financial year, according to the latest report issued by the Millennium Challenge Corporation (MCC). The decision follows Ghana’s debt default and ongoing challenges in reaching a debt restructuring agreement, a requirement outlined under U.S. law for nations to qualify for such support.
This announcement is a major development for Ghana, which has previously benefitted from MCC support in various sectors, including energy and infrastructure. It also highlights the serious implications of the country’s debt crisis and its potential to affect international relations and foreign aid partnerships.
Why Ghana Was Declared Ineligible
According to the MCC report, Ghana’s ineligibility is tied to provisions outlined in the State, Foreign Operations, and Related Programs Appropriations Act (SFOAA) for the 2025 financial year, specifically Section 7012. This section enforces a debt default restriction, meaning countries that have defaulted on their debts cannot receive U.S. foreign assistance unless they successfully negotiate a debt restructuring agreement with their creditors.
The MCC report stated:
“Ghana is ineligible to receive foreign assistance pursuant to the debt default restriction in section 7012 of the FY [Financial Year] 2025 SFOAA pending a debt restructuring agreement.”
This means that Ghana must first reach a formal agreement with its creditors before the United States can legally release funds or approve support through the MCC. Until such an agreement is in place, Ghana’s access to this type of economic assistance remains completely blocked.
Part of a List of 18 Candidate Countries
While Ghana is included among 18 countries identified as candidate nations for MCC assistance, legal restrictions currently bar it from receiving any U.S. aid under Part I of the Foreign Assistance Act. The report clarified this situation, stating:
“Ghana is among 18 countries that would be considered candidate countries for purposes of eligibility for MCC compact assistance for FY 2026 but are ineligible to receive United States economic assistance under part I of the Foreign Assistance Act.”
These restrictions are based on laws that were active as of August 6, 2025, and remain in place unless there are changes to either U.S. law or Ghana’s debt situation. Essentially, while Ghana meets the baseline requirements to be considered for MCC funding, it cannot benefit from the program until it clears the legal barriers created by its debt default.
The MCC added that circumstances can evolve, meaning Ghana’s eligibility could be reviewed again in the future. The report explained:
“Countries identified above as candidate countries, as well as countries that would be considered candidate countries but for the applicability of legal provisions that prohibit U.S. economic assistance, may be the subject of future statutory restrictions or determinations, or changed country circumstances, that affect their legal eligibility for assistance under part I of the Foreign Assistance Act by reason of application of the Foreign Assistance Act or any other provision of law for FY 2026.”
Other Countries Facing Similar Restrictions
Ghana is not alone in facing these restrictions. Other countries listed as ineligible to receive foreign assistance under the MCC include Burma, Burkina Faso, North Korea, Syria, Sri Lanka, Venezuela, and Zimbabwe. These nations are blocked for various reasons, ranging from debt defaults and political instability to sanctions and human rights concerns.
For Ghana, the situation is primarily tied to its financial obligations and debt restructuring efforts. However, unlike some of the other countries on the list, Ghana has a long history of working with international financial institutions and donor partners, meaning there is a clear pathway for reversing its ineligibility if it can achieve fiscal stability.
Background on Ghana’s Debt Crisis
Ghana’s debt troubles have been building over several years, with the situation reaching a crisis point in late 2022 and early 2023. The government announced in December 2022 that it could no longer meet its debt repayment obligations, effectively defaulting on a portion of its external debt.
To address this, Ghana entered negotiations with its bilateral and commercial creditors under the G20 Common Framework for Debt Treatments, a global mechanism designed to help heavily indebted countries restructure their obligations.
While some progress has been made, the process has been slower than anticipated. As of August 2025, Ghana had not finalized a comprehensive restructuring agreement, which is why the U.S. has applied the debt default restriction under Section 7012.
The inability to secure this agreement has far-reaching consequences, including limited access to new loans, stalled development projects, and a lack of investor confidence. It also means that foreign partners, like the MCC, are legally prohibited from providing certain forms of aid.
Implications for Ghana
Being declared ineligible for MCC funding is a significant setback for Ghana. The Millennium Challenge Compact is known for financing large-scale development projects aimed at boosting economic growth and reducing poverty.
In the past, Ghana has benefitted greatly from MCC programs. For instance, the Ghana Power Compact, signed in 2014, provided $498 million to support the country’s energy sector, focusing on improving electricity reliability and access. Such initiatives have played a crucial role in strengthening Ghana’s infrastructure and improving the quality of life for its citizens.
Without access to MCC funds, Ghana may face challenges in financing similar projects, particularly in areas like energy, agriculture, and transportation. This could slow down the country’s development agenda and reduce its ability to meet key targets under its medium-term development plans.
Additionally, the decision sends a strong signal to other international partners about Ghana’s current financial stability. Donor agencies and investors often look to U.S. policies as a benchmark, meaning this development could make other partners more cautious about engaging with Ghana until its debt issues are resolved.
Possible Path to Reinstatement
Although the current situation is challenging, there is a path forward for Ghana to regain eligibility. The most critical step is for the government to finalize a debt restructuring agreement with its creditors. This would demonstrate a commitment to fiscal responsibility and open the door for renewed international support.
Such an agreement would not only allow Ghana to qualify for MCC assistance but could also improve investor confidence and unlock additional funding from other international institutions like the International Monetary Fund (IMF) and the World Bank.
The process will require difficult negotiations and possibly further economic reforms, including measures to increase revenue, reduce expenditure, and stabilize the local currency. However, successfully completing these steps could restore Ghana’s reputation as a reliable partner in the global economic system.
The Broader Global Context
The MCC’s decision also reflects a broader global trend. Many developing countries are facing debt crises due to the combined effects of the COVID-19 pandemic, rising global interest rates, and declining commodity prices.
Institutions like the MCC must balance their desire to support development with the legal and financial realities of debt defaults. By enforcing restrictions like Section 7012, the U.S. aims to encourage nations to address their debt issues while protecting taxpayer funds.
For Ghana, this means navigating a complex international environment where access to foreign assistance depends heavily on demonstrating financial discipline and transparency.
Conclusion
Ghana’s ineligibility for MCC assistance in FY 2026 is a stark reminder of the importance of debt management and fiscal stability. While the announcement is a setback, it is not a permanent status.
With focused efforts on debt restructuring and economic reforms, Ghana has the opportunity to reverse this decision and once again access vital foreign assistance.
For now, however, the country must face the reality of its financial situation and work diligently to regain the trust and support of its international partners.
