Ghana, which defaulted three years ago, is on track to hand investors the best dollar-bond returns in emerging markets in May, amid mounting confidence in the government’s handling of the economy. 

Dollar-denominated bonds for the gold and cocoa producing country delivered 8.7% in total returns this month, according to data compiled by Bloomberg. It’s well above the average return of 0.4% for emerging markets in the period.

Climbing gold exports, trade surpluses and slowing inflation are helping Ghana’s currency and bonds bounce back after the country defaulted on its debt and sought the help of the

International Monetary Fund in 2022. President John Mahama, who won elections at the end of last year, has cut government spending in a bid to curb fiscal deficits and rein in inflation which slowed to 21.2% in April from a peak of 54% in December 2022.

“Simply put, Ghana is back,” said

Kato Mukuru, head of research and CEO of Emerging and Frontier Capital. “Trends have remained positive and this must have supported the rally in the bonds.”

The cedi, Ghana’s currency, is up 43% this year as the economy improves — the best performer globally after Russia’s ruble. 

Ghana is on track to reduce its debt as a percentage of gross domestic product below a 55% target set by the IMF. Barclays Plc sees the government hitting that target this year, three years ahead of the IMF deadline of 2028. 

“The recent bond outperformance has been supported by an improved external position” said

Samir Gadio, head of Africa strategy at Standard Chartered Plc. “The cedi rally has likely underpinned bonds, as this should help lower debt ratios.”