After implementing a domestic debt exchange program that concluded in February 2023 with over 80% participation, the government is preparing to re-enter the local bond market cautiously.
According to the third review of Ghana’s IMF program in December 2024, the government plans to resume bond issuances in the second quarter of 2025 (April–June).
However, with a new administration now in place, the timeline remains uncertain.
The government’s strategy includes issuing a two-year bond alongside releasing a revised medium-term debt management strategy and an annual borrowing plan.
These measures aim to reassure investors of a prudent and transparent debt approach—a critical step in rebuilding market confidence following last year’s restructuring.
Investor Sentiment: Cautious Optimism
Investor appetite for longer-term instruments remains uncertain. Since the domestic debt exchange, many investors have shifted to the treasury bill market, attracted by higher yields.
However, the government’s recent stance on borrowing costs has created tension.
At the most recent auction on February 14, 2025, the government rejected GHS 8.2 billion in bids, signalling a reluctance to accept elevated rates.
This move, while aiming to control borrowing costs, has left excess liquidity in the market—potentially creating room for a successful bond issuance if terms are attractive enough.
Still, investors remain watchful. The success of the planned bond issuance will likely depend on whether the new administration can strike a balance between fiscal discipline and meeting its spending commitments.
Navigating Fiscal Constraints
The decision to return to the bond market comes amid tight fiscal conditions. As part of its external debt restructuring agreement, Ghana has committed to capping new external borrowing at $250 million for 2025.
With international capital markets effectively closed to the government and rising domestic interest rates, reliance on the local bond market is becoming increasingly crucial.
At the same time, the expenditure plans outlined in the NDC’s manifesto—if implemented—could add further pressure to public finances.
This raises questions about the government’s ability to sustain a balanced borrowing strategy while meeting its policy goals.
The government’s return to the domestic bond market reflects a delicate balancing act. While treasury bills have provided short-term liquidity, longer-term bonds signal a commitment to sustainable financing.
However, investor confidence hinges on the credibility of the forthcoming debt management strategy and the government’s ability to maintain fiscal discipline.
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