ICN-GHANA NEWS DESK

Prepared by: Hamid Abdel-Mumuni
For BudgIT Ghana

Ghana’s Next Economic Test Begins

Ghana has reached a significant milestone in its economic recovery journey. On March 2, 2026, the Ministry of Finance announced the expiration of the three-year restriction on the issuance of new domestic bonds—a measure introduced in 2023 following the country’s debt default and the implementation of the Domestic Debt Exchange Programme (DDEP).

The announcement signals a return to long-term domestic borrowing and a departure from the government’s heavy reliance on short-term Treasury bills. More importantly, it presents Ghana with an opportunity to demonstrate that the economic gains achieved under the International Monetary Fund (IMF) programme can be sustained through strong institutions, fiscal discipline and transparent governance.

The timing of the policy shift is notable. By the close of 2025, inflation had fallen to 5.4 percent, its lowest level since July 2022. The Ghana cedi had appreciated by approximately 30 percent, while real Gross Domestic Product (GDP) growth reached 6.3 percent during the first half of the year. These indicators suggest that Ghana’s economy has regained stability after years of turbulence.

However, economic recovery alone does not guarantee investor confidence. Trust in government debt instruments remains fragile following the restructuring process, and policymakers face the challenge of convincing investors that Ghana’s fiscal management has fundamentally changed.

The Treasury Bill Trap

Since the domestic debt restructuring exercise began in 2023, the government has depended almost exclusively on Treasury bills with maturities of less than one year. While this strategy enabled authorities to navigate the restructuring period, it also created a significant vulnerability known as rollover risk.

Under such a system, the government must continuously return to the market to refinance maturing debt. This exposes public finances to sudden changes in investor sentiment and interest rate fluctuations.

At the height of borrowing pressures in late 2024, the interest rate on 91-day Treasury bills climbed to 28.04 percent, while 364-day bills exceeded 30 percent. Such high borrowing costs consumed a substantial portion of government revenue and intensified fiscal pressures.

Recognising these risks, Ghana’s Medium-Term Debt Management Strategy (2025-2028) established clear benchmarks. Treasury bills are expected to constitute no more than 20 percent of domestic debt, debt maturing within one year should remain below 15 percent of total debt, and the average maturity profile of government debt should extend to at least eight years.

The return to domestic bond issuance is therefore not merely a financing decision. It is a strategic effort to reduce refinancing risks, stabilise borrowing costs and create a more sustainable debt structure.

Confidence Is Built on Credibility

Investor confidence is often discussed as though it were a matter of sentiment. In reality, confidence is rooted in evidence.

Ghana’s recent progress has been driven by a series of actions that have reassured investors. The government has consistently honoured coupon payments since 2025, achieved a primary budget surplus that exceeded projections, and secured positive assessments from major international credit rating agencies, including Fitch, Moody’s and S&P.

The IMF has also noted that declining inflation and improving monetary conditions could strengthen consumer confidence, enhance credit availability and stimulate private-sector investment during 2026.

Yet economic history offers an important lesson: confidence can take years to build and disappear in a matter of weeks. Sustaining investor trust will require deliberate policy choices that outlive the current IMF programme.

Life After the IMF Programme

One of the most important tests facing Ghana is whether fiscal discipline can be maintained after the expiration of the IMF Extended Credit Facility programme in May 2026.

Past experiences have shown that fiscal gains achieved under international support programmes can be reversed through election-related spending pressures, revenue shortfalls and excessive borrowing.

To avoid repeating these mistakes, fiscal discipline must become institutional rather than programme-driven. Recent reforms, including amendments to the Fiscal Responsibility Act and plans for a Fiscal Council, provide an important framework. However, the success of these reforms will depend on strict implementation and adherence to established rules.

The challenge is straightforward: can Ghana maintain prudent financial management when external oversight diminishes?

The answer will significantly influence investor perceptions in the years ahead.

Transparency Must Accompany Bond Issuance

As Ghana returns to the domestic bond market, transparency will become increasingly important.

The government’s Domestic Bond Programme Circular issued in March 2026 designated six Bond Market Specialists—Absa Bank Ghana, CalBank, Fincap Securities, GCB Bank, One Africa Securities and Stanbic Bank Ghana—to facilitate bond issuances and support market development.

While this institutional framework is encouraging, transparency must extend beyond the issuance process itself.

Investors and citizens need regular access to information regarding the volume of funds raised, the projects financed and the performance of bond-funded initiatives. Quarterly execution reports would strengthen accountability and improve market confidence.

This becomes even more important for specialised instruments such as infrastructure bonds backed by road toll revenues or other dedicated funding streams. Independent verification of revenue collections and utilisation will be essential if such instruments are to attract long-term investor participation.

Protecting the Primary Surplus

Another critical priority is safeguarding the primary budget surplus.

The 2026 Budget projects a primary surplus of GH¢23.3 billion, representing 1.5 percent of GDP. This follows an even stronger performance in 2025, when the primary surplus reached 2.6 percent of GDP.

Maintaining this momentum is crucial.

The return to bond issuance will inevitably increase debt servicing obligations over time. Without sustained revenue growth, these obligations could place renewed pressure on public finances.

Consequently, domestic revenue mobilisation must remain at the centre of government policy. Strengthening tax administration, reducing leakages and broadening the tax base are not optional reforms; they are necessary conditions for preserving fiscal stability.

A weakening revenue position could quickly undermine the confidence that investors have begun to regain.

The Energy Sector Risk Investors Are Watching

While much attention focuses on debt levels and fiscal balances, investors are also paying close attention to contingent liabilities within the energy sector.

According to recent IMF assessments, energy-sector arrears continue to represent a major vulnerability. Outstanding obligations, including legacy debts owed to key suppliers such as Sankofa, remain unresolved and could create future fiscal pressures.

Modern investors increasingly evaluate not only headline debt figures but also hidden liabilities associated with state-owned enterprises and unpaid obligations within critical sectors.

Addressing these concerns requires transparency. Government must provide clear disclosures regarding the scale of energy-sector arrears, the repayment strategy and the timeline for resolving outstanding obligations.

Failure to address these issues could weaken confidence in Ghana’s broader fiscal outlook despite improvements elsewhere.

A Milestone, Not the Finish Line

The expiration of DDEP-related restrictions marks an important chapter in Ghana’s economic recovery story. The country has made remarkable progress in restoring macroeconomic stability. Inflation has fallen, the cedi has strengthened, debt restructuring has been completed and investor concerns have gradually eased.

Yet the journey is far from over.

Investor confidence is not sustained through economic statistics alone. It is maintained through consistent policy implementation, transparent governance and credible institutions that demonstrate accountability.

A single episode of fiscal slippage, an opaque borrowing decision, a missed debt payment or a worsening energy-sector crisis could reverse much of the progress achieved over the past year.

For this reason, Ghana must view the domestic bond market as more than a source of financing. It should be regarded as a platform for accountability—one where citizens, pension funds and investors demand clear evidence that public resources are being managed responsibly and effectively.

The country has successfully reset its debt position. The challenge now is to permanently reset its relationship with fiscal discipline.

Source: BudgIT Ghana