The International Monetary Fund (IMF) has warned Ghana of elevated gross financing needs, projected to peak above 16% of Gross Domestic Product (GDP) in 2028. This significant financial pressure stems from a large concentration of Domestic Debt Exchange Programme-related maturities due in 2027–28.
This situation is primarily driven by Ghana's heavy reliance on short-term domestic instruments, specifically treasury bills. The IMF's Country Report on Ghana indicates that domestic debt vulnerabilities remain high. The large rollover needs in 2027-28, combined with financial institutions' substantial exposure to government securities, amplify these risks. The domestic market may struggle to absorb further government debt issuances.
This warning comes as Ghana continues to navigate its economic recovery path following recent debt restructuring efforts. The country's public finances have been under scrutiny, with efforts to stabilize the economy and reduce its debt burden. The concentration of maturities highlights a structural issue in Ghana's debt profile, where short-term borrowing has created future repayment challenges. This trend has been a recurring concern for economic analysts observing Ghana's fiscal management over the past few years.
The IMF has provided technical advice, recommending a carefully calibrated debt management strategy. This strategy aims to lengthen maturities through a gradual increase in Treasury-bond issuance. The report states, "A carefully calibrated debt management strategy aimed at a lengthening of maturities through a gradual scaling up of Treasury-bond issuance would help mitigate rollover risks."
Ghana has adopted a strategy to manage the 2027-28 maturity concentration. This plan includes partial redemptions using sinking funds, which are funded by earmarking 7.0% of non-oil tax revenue and Treasury-bond issuance. The strategy also involves buybacks and rollovers through treasury bills. The IMF also stressed the importance of monitoring non-resident participation in the domestic treasury bond market. This monitoring ensures consistency with Debt Sustainability Analysis (DSA) parameters.
Non-resident participation, while potentially deepening the market, introduces risks through capital flow volatility and exchange rate pressures. The IMF advises close and continuous monitoring of non-resident involvement in both primary and secondary domestic debt markets. Ghana must be ready to adjust external borrowing plans if inflows exceed prudent levels. Strengthening public debt reporting standards is also crucial. This includes expanding debt coverage to capture quasi-fiscal activities and improving inter-agency coordination. These measures will enhance risk monitoring and support more informed borrowing decisions.
The implications of these elevated financing needs are significant for Ghana's economic stability. Failure to effectively manage these maturities could lead to increased borrowing costs and potential pressure on the GHS. Decision-makers will need to ensure the adopted debt management strategy is rigorously implemented. Markets will closely watch Ghana's ability to attract long-term financing and manage its short-term debt obligations. The government's fiscal discipline and commitment to structural reforms will be critical in mitigating these projected risks.