BY Nadia Ntiamoah
The World Bank has cautioned the Government of Ghana against making an early re-entry into the Eurobond market, stressing that such a move could jeopardise ongoing efforts to rebuild credibility in the eyes of investors and development partners.
In its latest country assessment released over the weekend, the Bretton Woods institution argued that while Ghana may technically regain access to international capital markets, an early return would send the wrong signal to creditors and could derail the fragile path toward long-term economic stability.
Premature Borrowing
According to the World Bank, the most immediate positive step the government can take is to “refrain from precipitously re-accessing the Eurobond market.”
The report highlighted that gaining the ability to borrow again is not proof of credibility, but rather an opportunity to demonstrate sustained commitment to structural reforms.
The institution emphasised that credibility must be earned through sound policy implementation, not short-term debt accumulation.
“There is an urgent need to signal a clear break from the past and a commitment to change,” the report stated.
Focus on Domestic Revenue Mobilisation
The World Bank recommended that Ghana place vigorous emphasis on domestic revenue mobilisation to create sufficient primary fiscal surpluses.
This, it explained, would help put public debt on a sustainable trajectory while creating fiscal space for investments in development without excessive reliance on foreign borrowing.
It noted that generating domestic resources remains critical in reducing the country’s risk profile, lowering borrowing costs, and improving investment sentiment both locally and internationally.
Energy and Cocoa Sectors Under Scrutiny
The report also underscored that Ghana’s current economic crisis should serve as a turning point for long-delayed reforms, particularly in the energy and cocoa sectors.
The World Bank described these as “critical tests” of the new administration’s resolve to implement tough but necessary policy changes.
The energy sector has long been plagued by inefficiencies, rising debts, and financial mismanagement, while the cocoa industry continues to face challenges from fluctuating international prices, smuggling, and aging farms.
The institution stressed that addressing these structural weaknesses would be vital to restoring growth and building resilience.
Lessons from the 2022 Crisis
The economic difficulties deepened in 2022 when the country defaulted on portions of its external debt, triggering its worst financial crisis in decades. Inflation soared, the cedi depreciated sharply, and fiscal deficits widened.
While government officials initially attributed the downturn to external shocks such as the COVID-19 pandemic and the Russia-Ukraine war, the World Bank later concluded that Ghana’s fiscal crisis was largely self-inflicted, driven by weak revenue mobilisation, high public spending, and excessive borrowing.
The country has since entered into a $3 billion bailout programme with the International Monetary Fund (IMF), which requires strict fiscal discipline, revenue-enhancing measures, and debt restructuring.
Call to Stay the Course
The World Bank’s latest message adds pressure on the government to resist the temptation of seeking a quick fix through Eurobond issuance.
Instead, the institution insists that reforms, not fresh borrowing, should define Ghana’s economic recovery.
“Staying the course is vital for establishing credibility and substantially reducing country risk and borrowing costs, improving investment sentiment among foreign and domestic firms, and supporting a sustained growth recovery and long-lasting job creation,” the report indicated.
