Adnan Adams Mohammed
Ghana’s total debt stock has ballooned to GHC214 billion as at the end of November 2019. This represents 62.1 percent of Gross Domestic Product (GDP) with 57.9 percent of GDP (GH¢172.9 billion) at the end of November 2018.
Of the total debt stock, the domestic debt component was GH¢102.9 billion, while external debt component was GH¢111.9 billion with a share of 52.1 percent in the total public debt.
The government, through the Bank of Ghana, (BoG), planned to borrow an amount of GH¢19.087 billion from the domestic money market for the first quarter of 2020 by issuing Treasury Bills, Notes and Bonds.
Of the GH¢19.087 billion, GH¢15.685 billion would be used to roll over maturities and the remaining GH¢3.402 billion is fresh borrowing to meet the Government’s financing.
The government’s 2020 debt strategy focuses on an appropriate financing mix to mitigate the costs and risks to achieve the desired composition of the public debt portfolio with respect to borrowing from external and domestic sources.
The financing strategy for 2020 proposes issuances of Government securities on the domestic market and create cash buffers on top of the programmed net domestic financing for active liability management and cash management purposes.
The strategy is to issue / re-open medium to long-term instruments (2-year, 3-year, 5-year, 7-year, 10-year, 15-year and 20 Year bonds) and refinance some of the maturing Treasury bills and Bonds. The strategy also plans to issue marketable and the non-marketable debt against possible contingent liabilities arising from the financial and energy sectors in 2020.
On the external front, the strategy proposes the issuances on the International Capital Market provided market conditions are favourable and additional external borrowing for priority development projects, which cannot be financed on concessional terms.
To effectively implement the 2020 debt management strategy, government plans to prepare and publish a borrowing plan (consistent with section 60 of the 2016 PFM Law) to meet the aggregate borrowing requirements of government in 2020. The borrowing plan will include active liability management operations (to ease rollover risks ahead of large upcoming maturities) and building on the recent issuances of 6-year and 20-year bonds per the MTDS.
To foster the primary and secondary market development, government will continue its benchmark policy to re-open existing bonds to create benchmarks to increase market liquidity and facilitate more efficient market making.
A major policy for 2020 will be the development of a harmonised primary dealer manual to guide the markets. Government also intends to promote Bond Specialists to support the development of the domestic market.