The Ministry of Finance has formally concluded the three-year moratorium on issuing new domestic bonds, advancing Ghana’s economic recovery efforts. While Finance Minister Dr. Cassiel Ato Forson paints a picture of a “strong” macroeconomic environment and “low” inflation, the move raises a critical question: will investors, still reeling from the scars of the debt exchange, be willing to lend to the government again?
The Ghost of the DDEP: When “Risk-Free” Became Risky
For decades, Ghanaian investors viewed government bonds as the ultimate “risk-free” asset. That perception was shattered during the 2022 economic crisis. The Domestic Debt Exchange Programme (DDEP) saw roughly GH¢137 billion in debt restructured, forcing pension funds and individual bondholders to accept “haircuts” through reduced interest rates and much longer waiting periods to get their money back.
This trauma led to a near-collapse of the secondary bond market. Investors who once traded these bonds easily found themselves holding illiquid assets that few wanted to buy. The secondary market has struggled to regain its pulse since 2023, as many retail investors shifted their remaining capital into Treasury bills or “under the mattress” out of fear.
Testing a Fragile Market with New Issuances
Despite this lingering distrust, the government is ready to test the waters. Authorities plan to shift from high-interest Treasury bills to resuming long-term domestic bonds. including the return of Cocoa Bonds, now that the moratorium has been lifted.
The goal is to extend debt payment deadlines and reduce the pressure of short-term financing. The government points to the fact that since early 2025, every coupon payment on the “new” DDEP bonds has been paid on time as proof that credibility is returning. However, for many who lost significant portions of their life savings or retirement funds, “once bitten, twice shy” remains the prevailing sentiment.
A Pivot Toward Stability or a Risky Gamble?
President John Dramani Mahama’s administration has expressed deep gratitude for the “forbearance” of the Ghanaian people during the crisis, acknowledging that the recovery was built on the sacrifices of bondholders.
The success of this new issuance strategy depends entirely on whether institutional and retail investors are ready to try the government again. While the 2025-2029 Debt Management Strategy prioritizes fiscal discipline, the real test of market readiness will be the “bid-to-cover” ratio of the first few bond auctions.
The government is betting on a “strong” macro-environment, but the market is still nursing the wounds of the default. Some analysts also argue that the drop in the treasury bill rate, with the 91-day bill currently at 5.3%, may discourage patronage for the short-term investments in preference for the new bonds.
