Executive Summary

The Government of Ghana (GoG) officially re-entered the domestic capital market for long-term borrowing on March 2, 2026, following the expiration of a three-year restriction imposed during the 2023 Domestic Debt Exchange Programme (DDEP). This move marks a pivotal shift in fiscal strategy, transitioning from a heavy reliance on expensive, short-term Treasury bills toward longer-dated, sustainable instruments as outlined in the 2025–2028 Medium-Term Debt Management Strategy (MTDS).

The re-entry is supported by a significantly improved macroeconomic environment. Inflation has plummeted from a 2022 high of 54% to 3.3% by February 2026, and 91-day Treasury bill rates fell from 35% to approximately 10.7% in the same period. The government’s return is a subject of intense debate among economists and analysts, centered on whether it facilitates economic normalization or risks a renewed debt crisis. Advocates argue that re-entry is essential for financial stability and economic growth

By issuing 10-year and 15-year bonds (such as the GH¢10 billion “Big Push” infrastructure bonds), the government can spread repayment obligations, reduce “rollover risk”, and provide institutional investors with alternatives to short-term T-bills. Critics warn the move may be premature, potentially leading to a “serial default” if funds are used for operational expenses rather than productive investment.

Concerns persist that high-interest premiums required to attract wary investors could worsen the debt-to-GDP ratio, which is projected to remain at high risk of debt distress through 2026. The 2022 DDEP caused real value losses between 50% and 90% for many investors. Rebuilding trust is difficult due to the "take-it-or-leave-it" approach of previous restructurings, which compromised the perceived "inviolable" nature of state-backed securities.

Weak domestic revenue mobilization is identified as the single biggest threat to fiscal stability. Ghana’s revenue-to-GDP ratio (averaging 13%) lags significantly behind sub-Saharan peers (27%), forcing a continued reliance on debt to fund expenditures. Compensation for public employees consumes over 57% of domestic revenue, while interest payments absorb another 31.7%. This leaves minimal "fiscal space" for capital projects, necessitating further borrowing

Escalating Middle East tensions and the Russia-Ukraine conflict drive commodity price shocks. While high gold prices (above US$5,370/oz) bolster reserves, rising crude oil costs threaten inflation gains and increase the fiscal deficit, projected at GH¢64.2 billion for 2026.

Significant principal repayments are due in 2027 and 2028, creating a potential “dangerous feedback loop” if the government cannot roll over these obligations at sustainable rates. Ghana remains under an IMF-supported program aiming to achieve a “moderate” risk of debt distress by 2028.

To ensure re-entry leads to stability rather than disaster, aggressive revenue reforms are needed to broaden the tax base by targeting the informal sector, high-net-worth individuals, and implementing digital property taxation, which has shown potential to increase collections by over 100%. The government should review the Minerals and Mining Act to reduce excessive tax exemptions and negotiate production sharing agreements to maximize state revenue from the commodity boom. Legislation like an updated Fiscal Responsibility Act should mandate primary surpluses and limit expenditure overruns, particularly during election cycles.

Ghana’s return to the domestic bond market is a high-stakes, calculated risk. It offers a necessary pathway to fix a broken debt maturity structure, but success depends entirely on the government’s ability to exercise fiscal discipline and move beyond “rhetorical” spending cuts toward concrete structural reforms. Failure to do so risks a snowballing of debt that could lead the country back into a debt trap.

1.0 Introduction/ Background

The over next four years, Ghana is expected to pay about GHS150.3 billion for DDEP representing 11.6% of GDP of which 73.3% is due in 2027 (GHS57.6 billion) and GHS 52.5 billion in 2028 while the country faces significant external debt service obligations over the next four years totaling US$8.7 billion representing 10.3% of GDP with heavy concentration in 2027 and 2028.  Furthermore, 55% of the total external debt service obligations of US$8.7 billion is due to be serviced in 2027 (US$2.5 billion) and US$ 2.4 billion in 2028. The government re-entering into domestic bond market carries significant risks and challenges if the re-issuances are not properly aligned with maturing obligations in 2027 and 2028.

The Ghana government's decision to re-enter the domestic bond market in 2026, following the expiration of restrictions from the Domestic Debt Exchange Programme (DDEP), is viewed by analysts as a crucial step toward financial normalization, yet one that carries significant risks if not carefully aligned with impending debt maturities. Failure to align new issuances with these large maturities could lead to a "snowballing" effect, where new debt is used simply to pay off old debt, increasing the risk of reversing recent debt-to-GDP improvements. The domestic market is still recovering from the 2022/2023 DDEP, which saw investors (including banks and pension funds) accept reduced interest rates and extended tenors. Rushing to issue large volumes of bonds could drive up interest rates, placing further strain on the budget. 

A heavy return by the government to the bond market may lead to crowding out, where banks prioritize safe government securities over lending to the private sector, hindering economic growth.  Re-entering the domestic bond market presents a critical challenge for the government due to a "maturity wall" in 2027 and 2028, where restructured debt obligations from the Domestic Debt Exchange Programme (DDEP) are set to peak.

Improper alignment of new issuances with these existing maturities could trigger a refinancing crisis. The debt service obligations of 2027 and 2028 are major humps. These humps are cancerous and pose significant risk to the economy. With the above background the Ghanaian government must tread cautiously for the re-entry into the domestic capital market in 2026, marking a shift from three years of restrictions imposed following the 2023 debt default and Domestic Debt Exchange Programme (DDEP)

Re-entering domestic capital market after Ghanaian government default is complex because the challenge extends beyond simply clearing debt; it involves overcoming a systemic breakdown in the domestic financial ecosystem. Default shatters public and investor confidence, often leading to "jittery" markets where participants remain wary even after a resolution. A default signals that a government may be willing to ignore property rights or lacks transparency regarding the true state of the economy. Default leads to a significant drop in credit scores, which remains a negative mark for years, making it harder to qualify for future credit on favorable terms.

The complexity of re-entering domestic capital markets post-default is primarily driven by a "loss of confidence" in the government's commitment to repayment, which often results in a prolonged exclusion from Ghanaian financial markets.  This re-entry is complicated by "premature risks"—or the dangers of returning to the market before structural reforms are in place—and a "snowballing risk" caused by the tight coupling of the sovereign with the domestic banking sector, which can lead to a vicious cycle of re-default.Ghanaian government default was not merely financial events but significant reputational shocks. A default signals a potential lack of willingness to honor property rights, leading to a long-term loss of confidence among domestic investors.

Returns to domestic and international capital markets are often, in nearly 75% of cases, followed by a sequence of default events or distressed exchanges. Re-entering too soon, before economic fundamentals have recovered or debt restructuring is fully completed, often leads to high probabilities of re-default. Snowballing risk in the domestic capital market is a major concern. Domestic banks are typically the largest holders of their own government's debt. When a government defaults, it hits the balance sheets of these banks severely, leading to a contraction of credit to the private sector and a domestic banking crisis.

The feedback between a weak banking sector and a defaulting government can create a "doom loop." A banking crisis reduces economic activity, shrinking tax revenues, which makes it harder for the government to repay, thus amplifying the original risk. The loss of liquidity within the domestic market due to bank exposure to defaulted bonds makes it harder to finance domestic firms, resulting in a deeper, longer-lasting economic contraction.

The complexity of re-entry post-default is more about the loss of confidence, premature risks and snowballing risk in the domestic capital market.The DDEP had caused significant losses to domestic investors (banks, pension funds, and individuals), with some reports estimating losses between 50% and 90% in real value. Re-engaging these investors requires overcoming a deep-seated reluctance, as the "take-it-or-leave-it" approach of the initial restructuring reduced trust. High debt levels can lead to a loss of investor confidence, resulting in higher borrowing costs, lower demand for bonds, and potential default.

The complexity of re-entry post-default is further complicated by premature risks. This phrase highlights that reintegrating into society (re-entry) after a period of failure, incarceration, or default is made significantly more difficult by immediate, high-stakes obstacles (premature risks) that appear right at the beginning of the transition. These premature risks can lead to a quick relapse or repeat of the default, making long-term success harder to achieve.Economists andanalysts cautioned that a hasty return to the domestic bond market could jeopardize the country's fragile economic recovery, potentially triggering higher borrowing costs and further capital flight.

Snowballing" debt risk is another major concern for re-entry into domestic bond market.Concerns exist that new debt might be used to bridge ongoing revenue-expenditure gaps, leading to a "snowballing" effect where debt servicing consumes a prohibitive share of revenue. Snowballing" debt risk in the context of re-entering the domestic bond market refers to a dangerous cycle where mounting interest payments exceed economic growth, causing the debt-to-GDP ratio to accelerate uncontrollably. This forces governments to borrow at higher rates to repay existing debt, threatening fiscal stability and investor confidence

The Government of Ghana (GoG) officially re-entered the domestic capital market for long-term borrowing on March 2, 2026, following the expiration of a three-year restriction on new bond issuances. This restriction was originally imposed in 2023 as a condition of the Domestic Debt Exchange Programme (DDEP) to stabilize the market after the 2022 default. The return requires rebuilding trust after the significant losses incurred by investors during the 2022 default and subsequent restructuring.

The 2022 GoG default triggered a major Domestic Debt Exchange Programme (DDEP), resulting in severe bank balance sheet impairment, tightened credit conditions, and a reliance on IMF support for stability Re-entry into the domestic market risks crowding out the private sector, high borrowing costs, and renewed debt distress.  The re-entry is supported by a more stable macroeconomic environment, where T-bill rates have fallen from over 35% in early 2023 to around 10.7% in early 2026, and inflation has decreased from a high of over 54% in 2022 to 3.3% by the end of February 2026.

The government of Ghana has officially begun the process of re-entering the domestic bond market in early 2026, marking a significant, yet contentious, shift in its fiscal strategy following a three-year freeze on new bond issuances. This move comes after the completion of the Domestic Debt Exchange Programme (DDEP), which aimed to stabilize the economy after a 2022 default.

The decision is viewed by proponents as a crucial step toward normalising the economy, but critics warn it could lead to renewed debt sustainability issues. Ghana’s strategy for re-entering the domestic bond market focuses on leveraging restored fiscal credibility to transition away from expensive, short-term borrowing toward sustainable, longer-dated instruments. The Government has adopted strategic borrowing plan under 2025-2028 Medium-Term Debt Management Strategy (MTDS) that focuses on lower-cost, longer-dated, and sustainable borrowing.

The government's return to the market is predicated on several macroeconomic and fiscal milestones achieved under the ongoing IMF-supported program: Restored Debt Servicing Credibility: Since 2025, the government has honored all coupon payments on restructured bonds, including a significant $909 million cash payment in February 2026. Macroeconomic Stability: Re-entry was enabled by a sharp decline in inflation (reaching 3.3% in February 2026) and the stabilization of the cedi, which had previously seen extreme volatility.

Improved Interest Rate Environment: Benchmark rates have fallen significantly; 91-day Treasury bill yields dropped from peaks of 28.9% to approximately 10.7% by March 2026. Operational Readiness:The Ministry of Finance appointed newPrimary Dealers (PDs)and Bond Market Specialists (BMS)who mustmeet strict financial and governance standards to lead the issuance process

2a. Proponents: A Way Forward.

Proponents, including government officials, academiaand some economists, argue that returning to the market is necessary for financial stability and economic growth. Key arguments for returning to the domestic capital market are about fiscal sustainability, investor confidence and economic growth, developmental financing, reduced external reliance and market deepening and inclusion.

Returning allows the government to restructure its debt, moving from high-cost, short-term treasury bills to more sustainable, long-term financing, which is crucial for meeting 2027-2028 principal debt obligations, improved economic indicators, such as reduced inflation and faster-than-expected GDP growth (averaging 6.3% in 2024), have restored investor confidence, making a return feasible and necessary to support private sector growth,  access to domestic funds enables the government to finance infrastructure and development projects, which are essential for economic growth, a robust domestic market reduces, or at least complements, the need for costlier international borrowing and strengthening the domestic market facilitates a broader investor base, allowing local participation in capital markets

Other arguments for the Government’s re-entry into domestic capital market.

• Reduced Reliance on T-Bills: The return to long-term bond issuance aims to curb excessive dependence on short-term Treasury bills, reducing rollover risks and restructuring the debt maturity profile.
• Improved Macroeconomic Conditions: Supporters and academia cite a strengthened, more stable macroeconomic environment, including declining inflation, which makes the domestic market more attractive for longer-term instruments.
• Restored Investor Confidence: The government has consistently honoured coupon payments on restructured bonds since 2025, which is seen as restoring investor confidence and enabling a "natural" return to the market.
• Market Deepening and Liquidity: Reopening the market is expected to enhance liquidity and provide institutional investors with alternative instruments beyond short-term treasury bills.
• Infrastructure Financing: The government plans to utilize this avenue to raise capital for development projects, such as the planned GH₵10 billion "Big Push" infrastructure bonds in 2026
• Reduced Rollover Risk: By issuing longer-dated bonds, the government can move away from relying on short-term Treasury bills that require frequent, risky refinancing.

2b. Opponents: A Path to Debt Overhang

However, Opponents and analysts express concern that the re-entry is premature and carries substantial risks:  

Ghana stands the risk of a new debt trap which could stem from the high interest rates and crowding out. Re-entering the market too soon could spike interest rates, making borrowing expensive and increasing the cost of debt servicing. Furthermore, a strong return to domestic borrowing could "crowd out" the private sector, as banks may prefer lending to the government over supporting private business, thus hindering economic growth. High debt service payments (2027-2028) with new debt issued could create refinancing risk that could lead to another debt crisis. Some experts warned that after a massive restructuring (DDEP), a quick return to high-cost borrowing could turn Ghana into a "serial defaulter" if the funds are not used for productive investments but rather for operational expenses. 

c.  Other arguments against the government re-entry into domestic capital market.

• Premature Timing: Critics, including financial analysts, argue that a quick return after severe "haircuts" to investors could be premature, potentially causing further distress to the already fragile economic recovery.
• Risk of New Debt Accumulation: There are fears that the move could initiate a new cycle of debt accumulation, as the underlying structural fiscal challenges (high expenditure vs. low revenue) that led to the default still exist.
• Financial Sector Fragility: The financial sector is still recovering from the Domestic Debt Exchange Programme (DDEP). A rapid return to heavy borrowing could crowd out private sector lending and put renewed stress on financial institutions.
• High Borrowing Costs: Re-entering the market might require offering high-interest rates to attract investors, which could increase the cost of debt servicing and worsen the debt sustainability outlook.
• Lack of Confidence: Despite the government's efforts, some investors still feel that the "take-it-or-leave-it" approach of the past has not fully restored trust in government securities
• Current global geopolitics. The Ghanaian government's planned re-entry into the domestic capital market in 2026—designed to support economic recovery and fiscal sustainability after debt restructuring—will be heavily influenced by a volatile global geopolitical landscape. While domestic conditions are improving, geopolitical factors will likely affect investor sentiment, interest rates, and capital flow availability. Increased trade disputes, sanctions, and strategic competition among major powers (e.g., US-China) in 2026 are expected to erode global cooperation and trigger capital outflows from emerging markets. A more unstable and interconnected global risk environment may reduce investor appetite for frontier market debt, making it harder or more expensive for Ghana to raise capital in the domestic market, even if domestic fundamentals improve.  Geopolitical shocks, particularly those affecting supply chains in 2026, could lead to commodity price volatility. While strong gold prices are expected to support Ghana's foreign exchange reserves, pressure on other bulk commodities like cocoa and crude oil could weaken export earnings. Reduced export earnings due to global instability could lower fiscal revenues, potentially making the government's fiscal deficit higher than projected and reducing investor confidence in the sustainability of new debt.
• Resumption of Debt Cycle: The move could mark the beginning of a fresh cycle of unsustainable debt accumulation, if not accompanied by strict, sustained spending cuts.

3.  2026 Issuance Strategy

The government's re-entry strategy focuses on "longer-dated" instruments to move away from heavy reliance on short-term Treasury bills. 

• Infrastructure Bonds: Under the "Big Push" initiative, the government plans to raise GH¢10 billion in 2026 through 10-year and 15-year bonds issued in two tranches.
• Fiscal Buffers: The Ghana Sinking Fund has been reactivated with dedicated cedi and dollar accounts to ensure future repayment capacity.
• Targeted Indicators: The 2025-2028 Medium-Term Debt Management Strategy sets a primary surplus target of 1.5% of GDP to maintain long-term

Re-entering the bond market after a sovereign default is both an economic and political process that requires restoring investor confidence and demonstrating a credible commitment to debt sustainability. Governments must address the reputational damage associated with default, particularly where the restructuring has significantly eroded household savings and investor wealth. Rebuilding trust therefore becomes central to any successful market re-entry strategy.

Restoring investor confidence typically requires a combination of credible fiscal reforms, transparent debt management, and sustained engagement with international creditors. Authorities must demonstrate improved macroeconomic fundamentals, present a credible debt restructuring framework, and articulate a clear commitment to fiscal discipline. Equally important is the transparency with which the government communicates its strategy for meeting both existing debt obligations and future borrowing needs. The timing of market re-entry is also influenced by domestic and international financial conditions, as well as the structural characteristics of the domestic fixed-income market. A functioning yield curve that accurately reflects market conditions is essential for price discovery and investor participation. Without a credible benchmark yield curve, investors may demand excessive risk premiums, raising the cost of borrowing and undermining debt sustainability.

Re-entering the domestic bond market after a major default is therefore a politically sensitive undertaking. Governments must demonstrate a credible commitment to servicing both maturing obligations and newly issued debt instruments. This requires clear disclosure of how public revenues will be mobilized to meet debt repayments while maintaining fiscal stability. Such information must be communicated transparently to domestic investors, international creditors, and the broader public.The process also involves navigating a complex political economy environment. Stakeholders—including pension funds, financial institutions, trade unions, academia, civil society organisations, industry groups, and political opposition—play important roles in shaping the credibility and sustainability of the government’s re-entry strategy. Their confidence in the government’s fiscal trajectory can significantly influence market participation and the stability of the domestic bond market.

A further challenge arises from the refinancing risks associated with concentrated debt maturities. If the government struggles to roll over maturing obligations or raise sufficient funds in the market, the risk of renewed default increases. Managing these rollover risks requires careful debt profiling and credible fiscal consolidation measures. In Ghana’s case, the government’s return to the domestic bond market following the Domestic Debt Exchange Programme (DDEP) has implications for the broader financial system.

Increased government borrowing to refinance debt can intensify competition for domestic liquidity, potentially crowding out private sector credit. These dynamic raises borrowing costs for businesses and can constrain investment in the real economy. The debt crisis has also altered the structure of domestic debt markets. In the aftermath of restructuring, governments often rely more heavily on non-market placements and captive domestic investors—such as banks and pension funds—to finance fiscal operations. While this approach can provide short-term funding stability, it may also reduce market depth and distort price discovery if not managed carefully.

Underlying these challenges is the issue of debt overhang. Debt overhang occurs when a country’s accumulated debt is so large that it discourages investment and slows economic growth because potential returns from new projects are expected to accrue primarily to existing creditors rather than to investors or the domestic economy. As noted by Paul Krugman (1988) and Jeffrey Sachs (1989), debt overhang arises when the present value of a country’s future revenue streams is lower than the face value of its outstanding debt.

In such circumstances, high debt levels effectively function as a tax on investment. Investors anticipate that future profits may be appropriated through taxation or inflation to service existing debt obligations. This expectation reduces incentives for private investment and slows capital accumulation. Empirical evidence suggests that the negative impact of high public debt on economic growth operates largely through its effect on investment and capital formation. Studies such as those by Benedict Clements et al. (2003) and Catherine Pattillo et al. (2003) find that excessive debt burdens can weaken economic performance by reducing investment and encouraging short-term policy choices that prioritize quick fiscal gains over long-term development.

Consequently, a premature return to the bond market—before economic fundamentals have sufficiently improved—can expose the government to high borrowing costs and renewed debt vulnerabilities. Successful re-entry therefore requires cautious and transparent debt management, sustained fiscal consolidation, and policies that restore investor confidence while supporting economic growth.

4. International Monetary Fund (IMF) Debt Sustainability Analysis (DSA)

Based on the International Monetary Fund (IMF) Debt Sustainability Analysis (DSA) and projections as of late 2025, Ghana is navigating a, high-risk, but stabilizing debt path, with key benchmarks for 2026 focused on fiscal consolidation and reducing the debt-to-GDP ratio.

The program aims to move Ghana to a "moderate" risk of debt distress by the end of the program period. Ghana’s debt is assessed to remain at high risk of debt distress (DSA). Compared to the 4th Review DSA, the debt trajectory has improved significantly on stronger-than-anticipated currency and GDP growth. Although all DSA debt indicators are below respective thresholds under the baseline scenario (mechanically signaling a moderate risk), staff has applied judgment to maintain the high-risk assessment given significant uncertainties surrounding the commodity price of oil, cocoa, gold and exchange rate movements and the still elevated rollover and IPP payment needs.

Furthermore, Ghana is still classified as high risk of debt distress due to near-term breaches of the DSA thresholds. Before a country that defaulted on domestic bonds with restructured bonds can re-enter the domestic bond market, it needs to demonstrate a clear path towards fiscal stability and rebuild investor confidence, not to contract new debt, prudent fiscal reforms, and transparent communication

5. Key IMF Debt Sustainability Benchmarks and Projections for Ghana in 2026:

• Public Debt-to-GDP Ratio: Projected to decline to approximately 62.3 percent in 2026, down from over 90 percent in 2022 and 70.2 percent in 2024.
• Primary Balance Surplus: Target of 1.5 percent of GDP (on a commitment basis) for 2026, aligned with the fiscal rules and debt reduction objectives.
• Fiscal Deficit: Projected overall fiscal deficit (commitment basis) of 2.2 percent of GDP in 2026.
• External Debt Service: The ratio of external debt service to revenue is expected to reach 18 percent by 2028, with 2026 serving as a transitional year, limiting new non-concessional borrowing to US$250 million per year (2024-2026).
• International Reserves: The Bank of Ghana is expected to maintain gross international reserves (GIR) at least 3 months of imports by 2026.
• Revenue Mobilization: Total revenue and grants are targeted to reach approximately 16.6 percent of GDP in 2026.
• Real GDP Growth: Projected to be around 4.8 percent in 2026.

6. Key Structural Considerations for 2026:

• Debt Restructuring: The 2026 projections assume the full completion of external debt restructuring and a resumption of medium and long-term domestic debt issuance.
• Contingent Liabilities: The DSA highlights that a combined shock, including energy and road sectors’ liabilities and financial sector costs, could significantly impact the debt trajectory.
• Financing Strategy: The government is expected to continue relying on domestic T-bills in the near term, with a focus on limiting non-concessional external borrowing
• Commodity Price Volatility. Possible issues with essential commodity imports or their costs. A steep drop in commodity prices due to a global slowdown could weigh on exports and growth
• Current global geopolitics. The Ghanaian government's planned re-entry into the domestic capital market in 2026—designed to support economic recovery and fiscal sustainability after debt restructuring—will be heavily influenced by a volatile global geopolitical landscape. While domestic conditions are improving, geopolitical factors will likely affect investor sentiment, interest rates, and capital flow availability.
• With T-bill interest rates falling substantially since March, the appetite for government paper has receded in the more recent auctions. Faced with elevated domestic rollover needs going forward, the authorities intend to resume T-bonds issuance in early 2026 to lengthen average maturity and ease rollover risks. Recent IMF TA recommended doing so gradually, as the spread with the monetary policy rate narrows, supported by a strategy for buybacks and a sinking fund to address large DDE bond maturities in 2027-28. 2026 Outlook: Projections for 2026 indicate a significant need for domestic financing, estimated at GH¢71.0 billion (4.4 percent of GDP) to cover the budget deficit.

7. Challenges and Risks for the re-entry into domestic capital market by the Government

First, current contingent liabilities that could impact negatively on the re-entry of domestic bond market as a result of the huge country’s debt overhang. The audit, conducted by the Auditor General with the assistance of two international firms (Ernst and Young and PricewaterhouseCoopers), was completed with a delay due to challenges in collecting information from line ministries (MDAs). Its findings show that of the GHs68.8 billion of payables being audited, about GHS47.8 billion (69.4 percent of total) was validated as legitimate payable claims and GHS8.6 billion (12.5 percent of total) could be validated for payment only if additional information is provided to the Auditor General.

The GH¢67.5 billion figure excludes specific debts such as US$1.73 billion owed to Independent Power Producers (IPPs), GH¢68 billion owed by the Electricity Company of Ghana (ECG), and GH¢5.75 billion owed by the Road Fund. The road sector alone accounted for GHS21 billion of the total arrears. Reports in July 2025 indicated a promise to pay GH¢4 billion out of the road sector arrears by the end of July 2025. At the same time, while GHS 2 billion of payables was reclassified as commitments, GHS10.4 billion of payables and GHS11.0 billion of commitments (representing 15.1 and 6.4 percent of respective totals,) were rejected due to violations of existing PFM provisions and/or lacking reliable and complete supporting information. The Cocobod debt of GHS32.8 billion and its debt of GHS5.2 billion to Bank of Ghana debt could create a huge debt overhang and also affect the re-entry of domestic capital market by government. Ghana must prevent the debt overhang of countries like Argentina and Greece.

 A government debt overhang—where a nation's debt exceeds its future capacity to repay it—creates a "kryptonite" effect for the domestic capital market, making the re-entry of government or private borrowers difficult, expensive, and risky. It stunts economic growth and causes investors to demand higher risk premiums, often leading to a vicious cycle of financial instability and underinvestment.

When the government is heavily indebted, it often continues to borrow to meet operational costs. This high demand for credit "crowds out" the private sector by absorbing available liquidity. Banks, facing high risk from sovereign debt, prefer lending to the government (perceived as having lower, albeit rising, risk) or holding government bonds. This limits the credit available for private sector investment, reducing growth. Investors, cognizant of the debt overhang, demand higher interest rates (yields) to compensate for the increased risk of default.

Higher yields mean the government must allocate a larger proportion of its revenue to debt service, leaving less for public services, which further depresses economic growth.  Domestic banks often hold massive amounts of government securities. A debt overhang means these assets are high-risk. If a restructuring is necessary, it can cause severe capital depletion in banks, leading to a credit crunch. Potential investors especially foreign banks operating in Ghana may adopt a "wait and see" approach, refusing to return until the government proves its ability to turn around its fiscal position, stalling the recovery of the market.

The debt overhang makes re-entry to the capital market a "chicken and egg" problem: the government needs capital to grow out of the debt, but the debt makes capital expensive and scarce. To re-enter successfully, governments often require restructuring, fiscal consolidation, or external support to restore investor confidence.

Second, global geopolitics could affect Ghana's re-entry into the domestic capital market by influencing the cost of borrowing, investor risk appetite, and macroeconomic stability. As of March 2026, escalating tensions in the Middle East (specifically U.S.-Israel strikes on Iran) have surged global gold prices above US$5,370 per ounce and pushed Brent crude above US$80 per barrel. While high gold prices bolster Ghana's reserves, rising fuel costs threaten the inflation gains that made the March 2026 lifting of the bond moratorium possible. Global geopolitics affect Ghana’s domestic capital market re-entry by driving currency depreciation, elevating inflation through commodity shocks, and reducing investor appetite for risk, increasing borrowing costs. Conflicts (e.g., U.S.-Israel/Iran) trigger safe-haven capital flight away from emerging markets, forcing Ghana to rely on higher domestic interest rates to attract investors.

Geopolitical tensions (e.g., USA and Iran war) could cause significant depreciation of the Ghana Cedi and spike import costs, making domestic bonds less attractive to investors looking for stable returns. Ongoing global geopolitical risk (GPR) correlates with reduced Foreign Direct Investment (FDI) and lower domestic capital participation, as investors act cautiously. Geopolitical shocks amplify market trends, with 2026 marked by a "flight to safety" into gold. However, sustained high oil prices increase Ghana's import bill and fiscal deficit, which is projected at GH¢64.2 billion (4.0% of GDP) for 2026. This necessitates GH¢71.0 billion in domestic financing, testing whether the government can attract investors without reigniting debt sustainability concerns.

As global shocks drive up inflation, the central bank may keep policy rates high to defend the cedi, forcing the government to offer higher yields on bonds to encourage participation in the domestic market. While international markets may be unfavorable, geopolitical volatility can force Ghana to rely heavily on the domestic market, straining local liquidity and potentially raising public debt, as observed in previous periods of high external uncertainty. While rising gold prices from geopolitical safety-seeking can boost export revenues, instability can simultaneously increase oil import costs, creating a mixed impact on fiscal balance. To successfully re-enter, experts emphasize that Ghana needs to maintain predictability, debt sustainability, and stability in its domestic market amidst these global uncertainties

Third, another major concern for the re-entry of domestic bond market that the government’s short to medium-term debt will be used to bridge an ever-growing gap between recurring revenues and recurring expenditures, reaching levels that compromise government’s ability to deliver basic services. The “snowballing” of short-term debt as governments run chronic operating deficits has been a leading cause of financial emergencies, causing banks and other investors to lose confidence in a government’s ability to run surpluses and repay its short-term debt.

Allowed to accumulate too long, short-term debt can reach unsustainable levels, requiring a high proportion of revenues to be devoted to debt service at the expense of public services. The concern that  Ghana’s return to the domestic bond market in March 2026 could lead to a "snowballing" of debt to fund recurring expenditures—compromising basic services—is a recognized fiscal risk. Analysts warn that using short-to-medium-term debt to bridge gaps between revenue and expenditure can reach unsustainable levels, eventually forcing a high proportion of revenue toward debt servicing. Re-entering the domestic capital market carries significant risks of reversing Ghana's recent, hard-won debt restructuring gains and potentially leading back to a debt trap if not managed with extreme caution

Fourth,weak domestic revenue mobilization has become Ghana’s key fiscal challenge and risk, the root cause of fiscal imbalances, and the biggest single threat to the government’s re-entry into domestic capital market. Weak domestic revenue mobilisation is indeed a critical risk, often identified as the "single biggest threat" to Ghana's fiscal stability and its return to the domestic capital market. As Ghana prepares for life after its IMF-supported program, the government's ability to fund itself without relying on unsustainable borrowing depends heavily on the Ghana Revenue Authority (GRA) meeting its targets. In 2025, Ghana’s total government revenue is projected to be approximately GH¢225.9 billion, representing roughly 16% of GDP.

Despite a strong 22.8% year-on-year increase in revenue by Q3 2025, collections slightly missed targets due to lower-than-expected import duties and direct taxes, partly offset by strong non-tax revenue. Total revenue and grants in 2025 stood at GH¢187.87 billion (13.4% of Gross Domestic Product), lower than the target of GH¢225.372 billion (14.4% of GDP). The Ghana Revenue Authority (GRA) exceeded its 2024 target, mobilizing GH¢153.5 billion against a GH¢145.9 billion goal. The Ghana Revenue Authority (GRA) has specifically highlighted a target of GH¢268.1 billion for 2026, aimed at being achieved through reforms and improved compliance, particularly in the informal sector.

This represents significant 18.8% increase over the 2025 projections, driven by non-tax reforms, improved compliance and digital tax administration systems. The biggest threat to the re-entry of domestic capital market could be non-achievement of domestic revenue set out in the 2026 budget.  The Ghana Revenue Authority (GRA) has set an ambitious revenue mobilization target of GH¢268.1 billion for the 2026 fiscal year, anchored on far-reaching reforms to the country’s Value Added Tax (VAT) regime. The inability to achieve domestic revenue target could have negative impact on the country’s debt overhang. Despite improvements, challenges remain, including high revenue leakage, reliance on non-tax revenue, and the need for stronger performance by state-owned enterprises.

Recent work by the IFS (2018) shows that Ghana’s domestic revenue/GDP ratio remains far below the levels of its sub-Saharan African peers, and the revenue gap has increased significantly in the past years. Persistent bureaucratic inefficiencies, weak expenditure controls at sub-national levels and corruption risks could erode fiscal credibility. The country’s domestic revenue/GDP ratio averaged 16.7% in recent years, much less than the sub Saharan African countries average of 27% of GDP, suggesting that Ghana’s actual domestic revenue is far short of what the country’s economic potential and institutional development could generate.

If Ghana’s domestic revenue had performed like its regional peers, the country could have generated significantly more revenue, which could have been used to pay off its expenditure overruns, with extra funds to pay off some of its debts and the intended new bonds. Without strong domestic revenue, the government's ability to return to the capital market to refinance debt and fund development will be severely limited, forcing a continued reliance on high-interest domestic borrowing

Fifth,rising public sector wages and compensation in Ghana have a direct, negative impact on domestic debt, primarily acting as a major driver of fiscal deficits that necessitate increased government borrowing. As of 2025, public sector salaries consume over 57% of the country's domestic revenue, creating a substantial burden that limits funds available for infrastructure and development. The high wage bill forces the government to rely heavily on borrowing from domestic sources (banks, insurance, and pension funds) to meet expenditure needs. This large, ongoing borrowing crowds out credit to the private sector. The accumulation of debt, driven in part by wage expenditure, has led to a situation where interest payments on debt absorb a massive portion of government revenue (around 31.7 percent), further tightening the budget and reducing fiscal space.

In late 2024, domestic debt service was extremely high, exemplified by a reported GH¢75.62 billion in service payments during Q3 2024, partly necessitated by managing expenditure, including salaries.  Employee compensation is a primary component, along with interest payments, driving the budget deficit. A one-standard-deviation increase in the wage bill can widen the deficit, with effects lasting several years. Despite efforts to manage the wage bill, the budget for 2025 projected a rise in employee compensation to GHS 73 billion straining public finances bigger than CAPEX.

The disproportionate share of revenue consumed by wages leaves minimal resources for capital projects, forcing the government to borrow for development. In summary, rising public sector wages in Ghana significantly contribute to, and complicate, domestic debt management by increasing the fiscal deficit, necessitating more domestic borrowing, and consuming a large share of revenue that would otherwise be used to service or repay existing debt

Sixth, furthermore, the DDEP and external debt restructured had raised concerns about Ghana's future debt sustainability. The government faces increased refinancing risks and potential default due to its heavy debt obligations in the coming years, so for the government to additional debt payment obligation could be disastrous for the country’s debt sustainability. Without robust fiscal reforms, aggressive revenue mobilization through reduction in tax exemptions and concessions as well as diversifying its tax revenue streams and stricter control on government expenditures as well as reduction of corruption in the public sector, and re-entry into domestic bond market could be an economic disaster.

Without robust fiscal reforms and strict control over government expenditure, the DDEP and external bond restructured may have simply postpone debt obligations rather than achieve its long-term debt sustainability goal. The link with default risk becomes evident if the government encounters difficulties in refinancing or repaying these concentrated debt obligations. Failure to secure adequate funds could lead to a situation where the government may struggle to meet its financial commitments, potentially resulting in a default on its debt obligations.

Presently, due to terms set by the IMF has been cautious of the government intention of re-issuing of medium to long-term bonds in the domestic capital market. If this restriction persists, or if the IMF program outcomes do not enable the government to successfully roll over the restructured bonds, the risk of default increases. Such instances would restrain the government's capacity to manage its debt, compelling it to seek alternative sources of funds to fulfil its debt obligations

Seventh, Loss of confidence in the government’s medium to long term had been evident since the DDEP. The Domestic Debt Exchange Programme (DDEP) initiated by the Government of Ghana in December 2022 has significantly eroded investor confidence and created long-term skepticism regarding the government's fiscal management and re-entry into domestic capital market. Many individuals and institutional investors lost faith in the government's commitment to honoring its debt obligations, leading to a deep-seated reluctance to invest in future government securities.  The credibility of government bonds, once considered safe havens, has been severely compromised, affecting the long-term saving and investment culture in the country. The 2022 debt restructuring (domestic debt exchange) left investors cautious, making it challenging to entice them back without high premiums. The indirect effects of such a programme can also be substantial.

There had been loss of confidence among contributors to various investment schemes, including pensioners’ fearing that their retirement savings are at risk. This could lead to reduced participation in any future government bonds thus putting further straining the funds' financial health. The Domestic Debt Exchange Program (DDEP) in Ghana significantly eroded confidence in government securities, severely impacting financial institutions and individual investors. The restructuring caused a decline in asset values for banks, insurance companies, and pension funds, leading to a long-term, structural, and sustained loss of credibility. The restructuring was seen as a breach of the "inviolable" nature of state-backed securities, causing deep-seated apprehension among individual and institutional investors.

The DDEP led to weakened financial institutions due to reduced asset values and, in some cases, created a "dangerous feedback loop" requiring potential bailouts. The restructuring resulted in deferred principal payments until 2027 and 2028, affecting liquidity for pension funds. Concerns remain regarding high debt levels, potential future defaults when principal repayments peak in 2027–2028, and the long-term impact on the savings culture in Ghana. The aftermath saw a preference for alternative investments as investors became wary of government bonds. The debt restructuring also has implications for pension funds’ liquidity, deferring principal payments until 2027 and 2028. This delay may significantly reduce projected cash flow, which is particularly risky for Tier 3 schemes that require high liquidity to accommodate frequent client withdrawals. Additionally, the risk of debt default is heightened, given the substantial volumes of principal repayments due in the specified years, thereby affecting the sustainability of pension funds.

7 viii. Other Key Challenges and Risks associated with the Government’s re-entry into domestic capital market.

• High Cost of Borrowing: Due to continued speculative credit ratings, the government could face high interest rate premiums, making borrowing expensive.
• Crowding Out Private Sector: Intense government borrowing might reduce the funds available for the private sector, hindering economic growth.
• Premature Market Return: Re-entering too soon risks disrupting the IMF-supported program by increasing debt sustainability pressure.
• Refinancing Risks: The need to finance significant debt repayments, including impending bond maturities, puts pressure on the government to find, potentially, high-cost funds.
• Lack of Long-Term Funds: The domestic market is often characterized by low liquidity and a preference for short-term, rather than long-term, instrument
• Refinancing and Liquidity Pressure: The government faces "bullet payments" due in 2027 and 2028, requiring high predictability to refinance successfully. Current market conditions show tight liquidity, with some banks borrowing short-term to meet obligations

The Ghanaian government's re-entry into the domestic bond market, officially confirmed in March 2026 following the expiration of a three-year restriction, is a strategic shift aimed at restoring fiscal flexibility. Proponents view it as a way forward to elongate the maturity profile of public debt, while critics warn it could lead back to a debt overhang if not supported by rigorous structural reforms. Critical Review shows the success of the government’s re-entry hinges on balancing immediate funding needs with long-term fiscal discipline.

8i. The Way Forward:

• Reduced T-Bill Reliance: Re-opening the bond market allows the government to decrease its heavy dependence on short-term Treasury bills, which currently expose the state to significant rollover risks.
• Maturity Elongation: Issuing longer-dated instruments will help restructure the national debt by spreading repayment obligations over a longer period.
• Market Deepening: A functioning bond market provides diverse investment options for institutional investors beyond short-term money market instruments, potentially increasing overall market liquidity.
• Enhanced Credibility: Since 2025, the government has reportedly met all coupon obligations on restructured bonds, which officials argue demonstrates a return to fiscal discipline.
• Potential for Success: If implemented with caution and transparency, the move could allow Ghana to re-establish a stable domestic market. However, if used to fund high-cost projects without strong revenue growth, it risks creating a "debt overhang" scenario.
• Sustainability Focus: Experts suggest that for this to be a true "way forward," it must be accompanied by strict fiscal consolidation, not merely a mechanism to bridge gaps between revenue and expenditure.

8ii. The Risk of Debt Overhang:

• Unsustainable Deficit Financing: A primary risk is that new bonds might be used to bridge chronic gaps between recurring revenues and expenditures rather than for productive investment, leading to "snowballing" debt.
• Liquidity Pressure: Ratings agencies like Fitch have previously projected liquidity pressures for Ghana through 2026, with high interest-to-revenue ratios estimated at 30%.
• Crowding Out: Continued heavy government borrowing in the domestic market risks "crowding out" private sector investment, as banks may prefer the relative safety of government securities over lending to businesses
• Fragile Investor Confidence: While Ministry of Finance reports improved sentiment, some analysts warn that the "painful" memory of the Domestic Debt Exchange Programme (DDEP) may limit long-term investor appetite

 In conclusion, whether this is a "way forward" or a "path to debt overhang" is a subject of intense debate among experts, researchers and academia with the outcome depending on the government's fiscal discipline and ability to mobilize more domestic revenue in the coming months and years

 9. Strategic Recommendations for Policy Direction

First, the government’s strategy will be required to reduce the present value of total debt-to-GDP to below 55% by 2028 without additional debt impinging on the country’s debt sustainability as set out in the IMF targets. The current IMF-supported program aims to bring Ghana’s debt risk rating to "moderate" by 2028

The government must work extra hard to restore debt sustainability and bring the debt risk rating to “moderate” in the medium term. The PV of total debt-to-GDP and external debt service-to-revenue ratios will reach 55 and 18%, that is expected to be achieved in 2028. The government should not add more debt to worsen the three debt sustainability indicators.

The government must work hard to improve on current weak indicators. According to the IMF Debt Sustainability Analysis Public Debt-to-GDP Ratio: Projected to decline to approximately 62.3% which could be classified as at high risk of debt distress (DSA) by close of year 2026. The Government through Ministry of Finance must work extra hard to bring it down to moderate" risk of debt distress.

To avoid the prolonged debt overhangs seen in Argentina and Greece, Ghana must implement a rigorous debt restructuring and fiscal consolidation strategy. As of March 2026, the country has made significant strides in reducing its debt-to-GDP ratio and is preparing to exit its IMF-supported program. The government aims to sustain a debt-to-GDP ratio below 55% and a debt service-to-revenue ratio under 18% starting in 2028 to ensure long-term solvency.

Present value of external debt (in percent of)		External debt service (in percent of)		Present value of total public debt (in percent of)
	GDP	Exports	Exports	Revenue	GPD
Strong	55	240	21	23	70
Medium	40	180	15	18	55
Weak	30	140	10	14	35

The framework uses a composite indicator that considers a country’s historical performance, outlook for real growth, remittance inflows, international reserves, and other factors. Different indicative thresholds for debt burdens are used depending on the country’s debt-carrying capacity. Thresholds corresponding to strong performers are highest, indicating that countries with good macroeconomic performance and policies can generally handle greater debt accumulation.

On the basis of these thresholds and benchmarks, DSAs include an assessment of the risk of external and overall debt distress based on four categories: low risk; moderate risk; high risk, and in debt distress (when a distress event, like arrears or a restructuring, has occurred or is considered imminent. The DSF facilitates comparability across countries such as Ghana and is used by the IMF and World Bank in their analysis and policy advice. Debt sustainability assessments help determine access to IMF financing and also are used for the design of debt limits in IMF-supported programs. The framework’s effectiveness in preventing excessive debt accumulation hinges on its broad use by borrowers and creditors. Low-income countries are encouraged to use the DSF or a similar framework and creditors are encouraged to incorporate debt sustainability assessments into their lending decisions. 

The country’s DSA must aim at determining borrowing paths that can be maintained without facing debt-service difficulties or resorting to exceptional financing (i.e., debt rescheduling or accumulation of arrears). DSAs provide a link between debt dynamics and macroeconomic policies, and are therefore forward-looking and probabilistic. Whether a country, and specifically its government, will be able to service its debt depends on its existing debt burden as well as its prospective policy stance (particularly the fiscal and exchange rate paths) and expected international developments (which may influence the cost of financing as well as the willingness of investors to roll over existing debts). Ghana’s debt sustainability can be assessed on the basis of different debt and debt-service indicators relative to measures of repayment capacity.

The repayment capacity can be measured in terms of GDP, export proceeds, or fiscal revenue. GDP ratios provide an indication of the size of the economy. Export ratios indicate whether the country can be expected to generate sufficient foreign exchange to meet its debt obligations in the future. Last, revenue ratios measure the government’s ability to mobilize domestic resources to reimburse debt.

Second, improving domestic revenue mobilization is a critical factor in Ghana's strategic re-entry into the domestic capital market, directly influencing investor confidence, reducing reliance on high-cost borrowing, and enhancing fiscal stability following debt restructuring By strengthening tax collection systems and widening the tax base, the government aims to create sufficient fiscal space, which signals to investors that the country can sustainably manage its debt obligations. To close Ghana’s revenue mobilization gap, a strategy must seek to reduce the widespread tax exemptions and evasion, broaden the tax base, strengthen revenue administration, improve tax compliance, help combat abuses and corruption is urgently needed. This will require a critical look at the taxes paid by properties, mining companies, operators from the free zones, state-owned enterprises, and the informal sector businesses, as well as managing the risks associated with oil revenues.

The government must be aggressive to strengthen domestic revenue mobilization by increasing tax revenues from large companies, High Net-worth Individuals, Digital Property Tax, ceasing the granting of tax waivers, and increasing the capacity of the Ghana Revenue Authority to ensure that the existing laws relating to issues such as transfer pricing are fully implemented. Aggressive strengthening of domestic revenue mobilization through digital property taxation is a critical strategy for Ghana’s economy to expand their tax base, improve efficiency, and reduce reliance on foreign aid.

In contexts like Ghana, leveraging digital tools for property tax—such as the Unified Property Rate Administration Platform—has demonstrated significant potential to increase revenue, with pilot studies showing over 100% higher collections when using digital tools for identification and billing. Property taxes not only boost revenue but also enhance the fiscal contract between the state and its citizens, promoting civic culture and voluntary tax compliance. Digitalization offers transformative opportunities for property taxation. Government must complete the digitization and revaluation of property rates to enhance local government revenue.

By improving property registration, valuation, and compliance, digital tools can make tax systems more equitable and effective. However, the successful implementation of such systems requires strong political will and technical capacity. Digitalization can significantly enhance the efficiency and equity of property tax systems. Key areas where digital tools can be impactful include property registration, valuation, and taxpayer compliance.

Ghana must fully capitalize on diversifying its tax revenue streams through the introduction of equitable property taxes, and High Net-Worth Individual taxes like some of its peers. For example, Rwanda, Kenya and Uganda have implemented successful property tax regimes and High Net-Worth Individual taxes, which have contributed to their higher tax-to-GDP ratios of 28%. Government and MMDAs must urgently resume the collection of property rates, while the State addresses the challenges associated with the use of the unified common platform capable of billing, collecting and reporting property rates nationwide. An effective property tax IT system must successfully integrate a series of interconnected functions: at a minimum, identification of properties, assessment/valuation, billing, payments, monitoring compliance, and providing taxpayer service. It also needs effective coordination and cooperation between different ministries, departments, agencies and different levels of government.

Property and rent taxes also have the capacity to enhance domestic (local) revenue mobilization. For this reason, the Lands Valuation Authority has to make sure that the market value of all lands, houses, and other landed properties are determined at all times to support efficient property and rent tax mobilization. As a matter of urgency, the government after long completion of national identification project, the street- naming and property addresses the government should urgently embark on the property tax project. Credible tax regimes revolve around credible databases which in turn makes strategic revenue mobilization successful.  The completion of two national projects by previous government are very critical for efficient revenue mobilization, a vibrant economic sector, and development in general.

Successful revenue generation reduces the government's need to over-rely on high-interest, short-term Treasury bills, facilitating a shift towards longer-dated, lower-cost bonds.

Third, in the aftermath of the domestic debt crisis in 2022, policy makers in Ghana must discuss new rules to weaken the sovereign-bank nexus. The close link between the banking sector and the government, a situation known as the sovereign-bank nexus, stands at a decade high in the country. This situation exposes the sector to risks through elevated government debt and fiscal pressures.

In the wake of the 2022 domestic debt crisis, Ghanaian policymakers and the Bank of Ghana (BoG) must implement  a series of reforms to decouple the "sovereign-bank nexus." This nexus—where the financial health of banks is inextricably tied to the government's ability to pay its debts—was a primary driver of the sector's multibillion-cedi losses during the Domestic Debt Exchange Programme (DDEP). One proposal must be implemented is to limit the exposure of banks to domestic sovereign debt through various measures like ceilings or higher capital requirements on domestic sovereign exposure. The intention of this proposal is to reduce the risk of a “diabolic loop”, in which problems of sovereign debt sustainability leads to losses for banks, which in turn affect government revenues negatively or generate additional expenditures due to bailouts, hence making the domestic debt burden even more unsustainable.

Fourth, Government must adopt stringent Fiscal Consolidation and Structural Reforms in the post-IMF progamme: Adhering to the post -IMF-supported program, including strict expenditure cuts and revenue generation, to assure investors of debt sustainability. Government should adopt aggressive expenditure rationalization and public financial management by implementing an updated Fiscal Responsibility Act that mandates a primary surplus and limits annual expenditure overruns, particularly during election cycles.

By eliminating quasi-Fiscal Activities through the ending the practice of off-budget spending by state-owned enterprises (SOEs) and agencies to stop the accumulation of arrears. By Government adopting performance-based budgeting through the linking budgetary allocations to specific, measurable outcomes in health, education, and infrastructure to ensure value for money. The Government must continue with the Structural and Sectoral Reforms. By addressing the financial debt in the energy sector through renegotiated Power Purchase Agreements (PPAs) and moving toward cost-reflective tariffs to eliminate the need for continued bailouts. Through the implementation of measures to rebuild financial institution buffers following the domestic debt restructuring (DDE), including capitalization of state-owned banks and two privately owned that participated in Ghana Amalgamated Trust SPV in 2020.

The Government must ensure strict adherence to the SOE Governance by enforcing strict performance contracts on SOEs, prohibiting new government guarantees for loss-making SOEs unless they are undergoing restructuring.  To ensure long-term stability after its IMF programme (expected to end in mid-to-late 2026), the Government of Ghana must transition from crisis management to a rule-based fiscal architecture. As of March 2026, the strategy must focus on locking in the macroeconomic gains—such as reduced inflation and debt levels—through permanent legislative and institutional reforms.

Fifth, empirical literature argued that the re-entering the bond market after defaulting on past debt obligations is a complex process requiring careful planning and execution. It involves restoring investor confidence, managing the perception of risk, and effectively addressing previous default issues. The government has demonstrated its ability to repay the restructured debts both the domestic and international. For the government to rebuilding investor confidence is essential for successful re-entry into the domestic capital market.

The government must demonstrate a solid financial recovery, implement robust governance practices, and show a commitment to ethical and responsible debt management. The government has reactivated the Ghana Sinking Fund with dedicated cedi and dollar accounts to provide a buffer for future repayments. Strategy also includes active buybacks and bond exchanges to smooth the maturity profile. Although the Sinking Fund has been created already but most country’s domestic and external debt will be settled in 2026 and 2027 thereby making any further additional domestic debt issued impact negatively on country’s debt sustainability and debt overhang.

Sixth, the Government of Ghana must ensure fiscal discipline and efficiency of spending to reduce future debt obligations and consequential risks of default on the existing and future maturing obligations.  Success hinges on revenue-based fiscal consolidation and maintaining a primary surplus to ensure new borrowing does not exceed repayment capacity. The lack of fiscal discipline would only render the touted success of the DDEP illusive as well as for intended new bonds. The government must develop a robust fiscal framework in the medium-long term which will be an important tool to support fiscal sustainability and make policies more predictable.

Fiscal frameworks also guide political deliberations toward convergence on agreed-upon fiscal objectives, including the acceptable level of debt. Fiscal frameworks comprise long-term fiscal targets, fiscal rules, and fiscal institutions, as well as budget procedures. While numerical rules often operate in tandem with procedural rules (such as setting medium-term expenditure ceilings that are consistent with fiscal targets), some countries rely on procedural rules to control deficits and debt. Such procedural rules focus on institutional designs that give space to policymakers for judgment but provide incentives for fiscal responsibility. To ensure long term fiscal sustainability, there is the need to introduce fiscal anchors such as a Debt cap or limit in the country’s constitution to curtail the high Debt to GDP ratio over the past decade. In addition, proper coordination between fiscal and monetary authorities should be fostered. The Government must adopt a fiscal framework which has important implications for debt sustainability and the efficacy of monetary policy institutions.

When fiscal policy has not been anchored by a medium-term rule the public debt has often developed an explosive path, increasing the probability of a government default and inflation. By contrast, in countries where fiscal discipline has been anchored by rules that prevent the formation of explosive public debt path, an independent central bank has been more effective to respond to an increase in the deficit by raising interest rates and thereby forcing a fiscal adjustment. Fiscal frameworks and rules that reflect a broad consensus on sound policies can play a useful role in signaling a strong commitment to fiscal responsibility and sound macroeconomic management. As such, they can also contribute to support democratic accountability, rewarding good fiscal behavior by the electorate that fiscal discipline. The government must implement fiscal reforms to address the underlying causes of the debt crisis, such as reducing government spending, increasing tax revenues, or improving debt management practices, is crucial

v. Seventh, the government should urgently review revenue streams from the mining sector: The mining sector in Ghana has a dominant potential to contribute to national resource mobilization. However, the sector’s contribution to government revenue has not grown at the same pace as the overall GDP growth, and the overall impact of the sector to national development, despite the mineral commodity boom, is not very visible. This is because the incentives accorded mining companies have greatly limited the share of government revenue from the sector and constrained the opportunities for government to mobilize adequate resources to fund social and development programs.

The framework of the current mining legislation in the country, which generally seeks to encourage foreign investment, is not necessarily compatible with the maximization of revenue and attainment of social and economic development. The mining fiscal regime defines an array of taxes, rent, fees and tax incentives to foreign investors in the mining sector. The range of capital allowances, list of mining related equipment and items exempted from custom duties, the non-payment of capital gains taxes, value added taxes (VAT), dividend withholding taxes, corporate income taxes, the huge offshore sales revenue retentions and the payment of royalty at the lowest allowable rate constrains domestic revenue generation, resulting in less visible contribution of the sector to national economic development. The Minerals and Mining Act, 2006, (Act 703) Minerals and Mining Amendment Act 2015 provides for fiscal stabilization, mining investment and development agreements.

These agreements are supposed to be signed by mining companies with mining leases for specific mining prospects. The Act provides for companies to negotiate stability agreements to ensure that mining operators, for a period not exceeding 15 years, are not affected by new legislative enactments and amendments that would adversely affect their operations. In addition, companies with investment portfolios exceeding US$500 million may negotiate development agreements with the government. Such agreements enable the companies to negotiate specific rates and quotas for royalty payments, income taxes for their expatriate employees, etc. that tends to limit taxes and non-tax revenue paid by the companies. To ensure that the country benefits from the mining sector, in terms of growing its tax base, the government has to undertake a complete review of the mining fiscal regime and its investment and stabilization agreements.

This will require a re-examination of the Minerals and Mining Act, 2006 (Act 703) Minerals and Mining (Amendment Act 2015) and a review of mining contracts and agreements (IFS,2017). The government should therefore reconsider the extractive sector component of the strategy and revise it to incorporate recommendations long advocated by IFS (2017), most importantly our call for active state participation in the sector and/or the use of production sharing agreements to substantially improve revenue generation.

Eighth, the Government of Ghana, through the Ministry of Finance, must communicate transparently with all domestic investors to maintain financial stability, rebuild trust, and ensure the effective management of public debt. Transparent communication from the Government, specifically the Ministry of Finance (MoF), is essential to maintaining the integrity of the domestic financial market and ensuring long-term economic stability. Transparent communication acts as a crucial tool in managing crises, as it prevents panic, reduces information gaps, and encourages continued investment in the financial system. Communicating transparently by the Government through the Ministry of Finance would help to build trust and confidence in domestic investment climate: Transparent reporting is a foundational ethical consideration that reassures investors of the government’s commitment to honesty and accountability. In times of economic distress, this openness prevents the spread of rumors and manages public perception, which is crucial for retaining investor confidence.

Open communication regarding debt negotiations, borrowing, and fiscal policies is essential for maintaining sustainable debt levels. It allows for better assessment of risks and prevents the chaotic market movements often witnessed during financial crises, such as those in Argentina, Greece, Mexico and Asia. The openness of key public finance authorities has a strong anti-corruption effect. It ensures that public officials, who have a duty of stewardship, are accountable and that resources are not diverted. Transparent, accurate, and timely data in the post-DDEP allows domestic investors to make informed decisions. This is critical for economic policy management and for maintaining a functional financial sector.

Transparent communication ensures that all market participants have equal access to information, which levels the playing field, reduces information asymmetry, and minimizes risks of fraud. The Government through the Ministry of Finance must transparently must communicate with all domestic investment climate including banks, pension funds and others: Engaging clearly with domestic investors regarding the debt management strategy, debt sustainability and economic outlook to rebuild trust. Transparent management of public debt and fiscal policies is a precondition for macroeconomic stability and sustainable growth. Clear investment policies specifically designed to support domestic businesses lead to more sustainable growth and local market opportunitiesThe Ministry of Finance in Ghana has been legally mandated to ensure transparency and accountability in managing public resources to promote sustainable development. For domestic investors, this transparency is critical post the 2022/2023 DDEP.

Ninth, as Ghana prepares to re-enter the domestic capital market in 2026 amid a volatile global landscape characterized by geo-economic fragmentation, sanctions, and trade disruptions the government is adopting a "Reset Agenda" focusing on structural reforms, fiscal discipline, and de-risking. To mitigate global geopolitical risks, the following strategies are being, or could be, adopted: The Government must develop the Domestic investor base: The 10-year Capital Market Master Plan (CMMP) aims to increase the local investor base, encourage retail investor participation through digital platforms, and improve market liquidity to reduce reliance on foreign portfolio investors.

The government must institutionalize fiscal discipline through the establishment of an independent Value for Money Office and an independent Fiscal Council is aimed at strengthening post-IMF.  To buffer against external shocks and geopolitical instability, the government is prioritizing fiscal discipline and reserve accumulation. oversight and preventing future debt crises. Upholding legal frameworks and ensuring transparency in public procurement is crucial for creating a predictable, investor-friendly environment that can withstand external shocks. These strategies are designed to ensure that when Ghana returns to the market, it does so from a position of "disciplined strength," reducing its vulnerability to the shifting sands of global geopolitical competition

Lastly, since corruption has continued to be threat to the growth and development of Ghana’s democracy, there is a need to develop and articulate ways of dealing with the problem. If we must succeed in getting rid of corruption in this country, it must be designated corruption a national crime and set up special court or tribunal to deal with menace that impact negative on domestic revenue mobilization. Every both including the political elites and their party followers must be ready to collaborate with the Office of Special Prosecutor. It is not a man business.

The government and his/her appointees should build upright work force in the public sector for accountability and transparency. According to recent report, Ghana lost nearly US$3 billion (GHC45 billion) through corruption, illicit flows and transfers, under/ over invoicing and tax avoidance. The problem of corruption needs to be addressed at both the sector and national levels. National political leaders must make a commitment to eradicate this menace.

A holistic approach, including prevention and enforcement, will have much better chance of success than a simple focus on individuals. The problem of corruption needs to be checked at all levels including governmental level. Particularly given the fact that multinational companies bribe officials of developing countries like Ghana to procure orders and contracts, a coordinated approach by bilateral donors and international organizations is useful. An important step in this direction would be blacklisting by multinational organizations of multinational corporations that engage in corrupt practices to obtain international contracts and encourage corruption in developing countries like Ghana. Ghana must severely punish corrupt officials both in the public and private sectors like countries like Singapore and China to serve major deterrent.

Punitive action against corrupt officials can have an important deterrent effect. The role of OSP Office of Special Prosecutor must be strengthen by making it independent institution not under the office of Attorney General and Justice Ministry so that it could decisively deal with money laundering, corruption, tax evasion and illicit flow funds etc. The country could be modelled on the Nigeria Economic and Financial Crime Commission as law enforcement and anti-graft agency that investigates financial crimes and unknown transactions such as corruptions and money laundering.

It has own prosecutorial powers without referring the Attorney General and Justice Ministry. The role of the media is important in publicizing punishment of corrupt officials. Pecuniary penalties for corrupt behavior should be harsh enough to discourage officials from engaging in wrongdoing. In addition to pecuniary penalties, in some severe cases of corruption, tax evaders need to be imprisoned for term not less than 10 years and name shame.  Stringent laws for punishment of corrupt officials, along with the confiscation of property amassed through bribery, will help reduce corruption. Such laws must apply to both domestic offenders including political exposed persons (PEPs) and foreigners alike.

8. Critical Analysis of the Path Ahead

The success of this re-entry will depend on several factors: i. Bond Terms: Whether the government can attract investors with rates that do not reignite debt sustainability concerns. ii. Structural Reforms: The ability to move beyond "rhetorical" spending cuts to concrete fiscal consolidation. iii. Liability Management: Successful use of, or avoidance of, further debt exchanges to manage the "snowballing" of short-term debt and iv. Global geopolitics: global geopolitics could affect Ghana's re-entry into the domestic capital market by influencing the cost of borrowing, investor risk appetite, and macroeconomic stability.

Improving on domestic revenue mobilization; improving domestic revenue mobilization is a critical factor in Ghana's strategic re-entry into the domestic capital market, directly influencing investor confidence, reducing reliance on high-cost borrowing, and enhancing fiscal stability following debt restructuring. By strengthening tax collection systems and widening the tax base, the government aims to create sufficient fiscal space, which signals to investors that the country can sustainably manage its debt obligations.

9. Conclusion.

The return to the bond market is a calculated risk. It is a necessary "way forward" to fix the broken maturity structure of Ghana's debt. However, it only becomes a "path to debt overhang" if the government uses this opportunity to fund inefficiencies rather than investing in productive growth. The 2027 and 2028 maturity years remain critical, making this move a high-stakes, "tough" endeavor.

Ghana’s strategy for re-entering the domestic bond market, following its 2022 default and subsequent restructuring, centers on rebuilding investor confidence through sustained fiscal discipline, consistent repayment of restructured bonds, and reduced reliance on short-term T-bills. Ghana officially re-entered the domestic bond market in early March 2026, ending a three-year freeze on long-term, local-currency bond issuance that was imposed in 2023 following the country's debt default and Domestic Debt Exchange Programme (DDEP).

The strategy for this re-entry focuses on leveraging a stabilized macroeconomic environment—characterized by lower inflation and a stronger cedi—to shift away from expensive, short-term treasury bill reliance toward longer-dated, sustainable borrowing. The 2025–2028 Medium-Term Debt Management Strategy (MTDS) prioritizes a gradual return to issuing long-term bonds while fostering transparency and deepening domestic market participation.

Without robust fiscal reforms and strict control over government expenditure, the DDEP may simply postpone debt obligations rather than achieve its long-term debt sustainability goal. The issues mentioned above, including weak domestic revenue mobilization, restoring debt sustainability and bringing the risk-rating to moderate in the medium term of PV of total debt-to GDP and external debt service to revenue ratio of 55% and 18%, respectively.

DR RICHMOND AKWASI ATUAHENE

BANKING /FINANCIAL /CORPORATE GOVERNANCE CONSULTANT