BY ISSAH OLEGOR
The International Monetary Fund (IMF) has raised fresh concerns about the public debt outlook, warning that the country faces significant refinancing risks and mounting financing pressures over the next few years despite recent gains in macroeconomic stability under the IMF-supported economic recovery programme.
In its latest Country Report on Ghana, the Fund cautioned that Ghana’s gross financing needs are projected to rise sharply and could exceed 16 percent of Gross Domestic Product (GDP) by 2028, largely due to the concentration of repayments arising from the Domestic Debt Exchange Programme (DDEP) scheduled for 2027 and 2028.
According to the IMF, although Ghana has made considerable progress in restoring macroeconomic stability through fiscal consolidation, debt restructuring and policy reforms, the country’s domestic debt vulnerabilities remain elevated because of its continued dependence on short-term borrowing instruments, particularly treasury bills.
The report explained that the government’s heavy reliance on treasury bills, coupled with large volumes of domestic debt maturing within a short period, creates substantial rollover risks that could place renewed pressure on public finances if not properly managed.
The Domestic Debt Exchange Programme, introduced in 2022 as part of Ghana’s debt restructuring efforts during the economic crisis, enabled the government to exchange existing domestic bonds for new instruments with longer maturities and revised interest rates. While the programme helped secure IMF support and restore debt sustainability, significant repayments are now expected to fall due from 2027 onwards.
The IMF noted that the concentration of these maturities means the government will have to mobilise substantial financial resources within a relatively short period unless proactive debt management measures are successfully implemented.
The Fund also warned that Ghana’s financial institutions remain heavily exposed to government securities, making the domestic financial sector vulnerable to any future debt-related shocks. It added that the domestic capital market may have limited capacity to absorb additional government borrowing if refinancing needs increase beyond current expectations.
To reduce these risks, the IMF recommended that the government continue implementing a carefully calibrated debt management strategy focused on extending the maturity profile of domestic debt through increased issuance of longer-term treasury bonds instead of relying predominantly on short-term treasury bills.
According to the report, with technical support from the IMF, Ghana has already adopted a strategy aimed at managing the large debt maturities expected in 2027 and 2028.
The strategy combines several measures, including partial redemption of maturing debt through sinking funds financed by earmarking seven percent of non-oil tax revenues together with treasury bond issuances, debt buyback operations and the rollover of some obligations through treasury bills.
The IMF also highlighted the growing participation of foreign investors in Ghana’s domestic bond market, describing it as a development that offers both opportunities and risks.
While increased non-resident investment could deepen Ghana’s domestic capital market and provide additional financing for government, the Fund cautioned that excessive foreign participation could expose the economy to volatile capital flows, exchange rate instability and additional debt sustainability risks if investors suddenly withdraw from the market.
The report therefore urged the authorities to closely monitor foreign participation in both the primary and secondary domestic bond markets and remain ready to adjust borrowing strategies should inflows exceed prudent levels.
Beyond debt management, the IMF called for stronger public debt reporting and greater transparency in fiscal management.
It recommended that Ghana align its debt reporting framework with internationally accepted Government Finance Statistics Manual (GFSM 2014) standards while expanding debt reporting to include quasi-fiscal activities that are not always fully reflected in existing public debt statistics.
The Fund further stressed that stronger coordination among government institutions responsible for public finance management would improve debt monitoring, strengthen fiscal oversight and support more informed borrowing decisions in the years ahead.
