Deloitte Ghana has welcomed the government’s intention to execute a debt reprofiling and buyback programme, saying it is a strategically sound response to the challenges posed by high-cost debt obligations and uneven repayment profiles.
To maximise the benefits, the professional services firm is urging the government to prioritise buybacks of the most expensive and volatile debt instruments, targeting those that pose the greatest risk to fiscal stability.
“It is essential to conduct these operations in close consultation with key stakeholders, including domestic and international investors, to maintain market confidence.”
“We further recommend transparent communication of objectives, processes, and expected outcomes to all stakeholders to avoid market disruptions. Ultimately, debt reprofiling and buybacks should be embedded within a broader strategy of prudent fiscal management and sustainable borrowing practices”, it stressed.
It further strongly advised the government, as it plans to return to the bonds market, to ensure that borrowed funds are ringfenced for financing self-paying projects to reduce the burden placed on domestic revenue due to interest and principal repayment commitments on borrowings. “This will serve to improve fiscal discipline and maintain prudent fiscal balance”.
Sovereign Upgrade
Deloitte also welcomed the recent upgrade of Ghana’s sovereign rating from high to moderate.
To further strengthen debt sustainability and restore confidence among external commercial creditors, it urged the government to implement robust measures to safeguard and enhance its debt profile.
“The adoption of a concessional-first borrowing strategy is a prudent approach to minimising financing costs and mitigating potential debt risks. It is further recommended that concessional financing be prioritised for large-scale infrastructure, social, and climate-related projects, ensuring that new borrowings contribute meaningfully to long-term economic growth and resilience”.
It also pointed out that the government’s plans to re-enter the domestic bonds market represent a prudent step towards re-engaging with the domestic bond market.
“This process should be managed with caution and utilised primarily as a liability management tool to extend debt maturities, rather than as a vehicle for new expansionary fiscal spending”, it added.
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