In a step toward economic self-reliance, the government has announced its strategic return to the domestic bond market in the 2026 Budget, starting with a special issuance of Infrastructure Bonds. This move is designed not only to secure crucial funding for massive projects—like the proposed $2.8 billion road development push, but also to meticulously rebuild the trust shattered by the Domestic Debt Exchange Programme (DDEP).
The decision to lead with Infrastructure Bonds is a calculated effort to give investors a tangible, high-impact reason to return. Unlike general government debt, funds raised will be directly earmarked for visible projects—roads, ports, and power, creating a clear link between investment and national development. This visibility is intended to counter the intangible nature of past borrowing.
The Shadow of the Past: Will Investors Return?
The critical hurdle remains the trauma of the DDEP, where domestic investors, including banks, pension funds, and individuals, were forced to accept significant haircuts (losses) through reduced interest rates and extended maturity dates. The primary concern is whether this memory of broken trust will cause investors to stay away from the market entirely, severely limiting the government’s ability to raise capital.
Ghana’s economy is showing signs of recovery, with inflation falling and key macroeconomic indicators stabilizing. The recent upgrade of Ghana’s credit rating by S&P Global Ratings is a positive signal. Furthermore, the Infrastructure Bonds themselves may offer premium interest rates compared to standard Treasury instruments to entice initial investment.
But there are fears that the sins of the past—the DDEP, will undoubtedly keep many individual investors and smaller institutions cautious. For many, the haircut represented a profound breach of contract and a loss of confidence in the government’s credibility as a debtor. This reluctance could result in initial undersubscription of the bond issue.
Strategies to Rebuild Trust
To ensure the success of the Infrastructure Bonds, the government must go beyond high-interest rates and implement robust strategies to re-establish confidence:
The government must provide absolute legal and fiscal assurance that the funds raised will only be used for the stated infrastructure projects and cannot be restructured or accessed for general budget needs. The establishment of a Sinking Fund specifically for these bonds could guarantee timely coupon payments and principal redemption.
Some analysts argue that continuous and detailed communication about the bond’s performance, the use of the funds, and the progress of the underlying infrastructure projects is vital. Regular, accessible updates will show investors that the government is fully committed to transparency and accountability.
Crucially, the government must maintain a flawless record of timely coupon payments on all existing debt, particularly the new bonds issued under the DDEP. Recent payments made to DDEP bondholders are already helping to restore market confidence, but this discipline must be sustained over the long term.
By meticulously honouring the terms of the new Infrastructure Bonds and committing to disciplined fiscal management, the government can demonstrate that the DDEP was a painful, necessary exception, not a new standard. This is the path to redemption for Ghana’s domestic bond market.
