The Ministry of Finance of Ghana has responded to growing concerns regarding the pressures facing the T-bill market, largely attributed to the government’s heavy reliance on short-term debt instruments and elevated interest rates.
In comments made to NorvanReports, during a press briefing on the sidelines of the IMF/World Bank Annual Meetings on Saturday, the Ministry indicated a potential strategic pivot back towards long-term Eurobond issuance as part of its broader fiscal strategy.
A spokesperson for the Ministry emphasized that recent restructuring efforts have effectively addressed both domestic and external bond obligations, resulting in a “credit rebate” that has been integrated into the overall budget framework.
“This restructuring is consistent with our direction moving forward,” the spokesperson noted, asserting that it aligns with the government’s objectives for fiscal stability.
Highlighting the challenges posed by inflation, which peaked at 54% in 2022, the Ministry acknowledged that any bond issuance at that time would have been impacted by significantly higher real interest rates.
However, with inflation now halved, the Ministry expressed optimism about the potential for a more favourable environment for bond issuance, particularly as the government looks towards 2025.
“We expect to see normalization that will create opportunities for the domestic bond market,” the spokesperson added.
This shift in strategy comes as Ghana navigates a complex economic landscape characterized by rising interest costs, particularly on short-term debt instruments and the need for diversified funding sources.
The Ministry’s remarks reflect a commitment to enhancing fiscal resilience while balancing the pressures of short-term borrowing against the benefits of long-term capital markets.