As Ghana prepares to re-enter both domestic and international capital markets, Presidential Advisor on the Economy, Seth Terkper, has emphasized the need for a structured debt repayment mechanism to anchor investor confidence and ensure long-term fiscal health.
Speaking at the Graphic Ecobank Economic Forum in Accra, Mr. Terkper said that while the timing of a return to the markets appears promising, Ghana must first demonstrate fiscal prudence and adopt a robust debt management framework.
“If we are going to reintroduce bonds, we must introduce a debt repayment mechanism,” he stated.
Call for Sustainable Borrowing
Terkper pointed to Ghana’s continued reliance on short- to medium-term instruments such as treasury bills and hybrid bonds, warning that they are unsuitable for financing long-term development projects like infrastructure, energy, and social services.
“It’s very expensive and boring to use treasury bills for investment,” he said. He added that Ghana must match the tenure of its financing instruments with the lifespan of the assets they are used to build, an approach that enhances fiscal efficiency and minimizes rollover risks.
He also emphasized the need for strong investor protection mechanisms, particularly for institutional investors like pension funds, which suffered losses during the recent domestic debt restructuring.
Context: Debt Restructuring and IMF Support
Ghana is currently under a $3 billion Extended Credit Facility (ECF) arrangement with the International Monetary Fund (IMF) after facing its worst economic crisis in a generation.
The crisis, marked by soaring inflation, a depreciating currency, and unsustainable debt levels, forced the country to suspend payments on most external debts and restructure its domestic obligations.
The government has since completed a domestic debt exchange and is negotiating terms with external creditors. The Bank of Ghana recently reported signs of macroeconomic stability, with inflation moderating and fiscal indicators showing improvement.
Planned Market Re-Entry
The Ministry of Finance has hinted at plans to re-engage the capital markets as early as the end of 2025, depending on progress with external debt negotiations and sustained macroeconomic gains. Ghana was previously locked out of the markets due to heightened risk perception, credit rating downgrades, and rising borrowing costs.
Terkper’s call aligns with broader sentiments among economists and policy watchers that any return to the markets must be backed by credible frameworks to avoid a relapse into unsustainable debt levels.
Long-Term Outlook
Experts believe that Ghana’s ability to attract investors again will depend on transparent fiscal reporting, stronger revenue mobilization, and reforms in public financial management. There are also calls for legislation that mandates setting aside portions of revenue for future debt repayments , an approach some countries have adopted to reduce default risks.
