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Tag: t-bills

  • Mahama confident in 2026 expansion as IMF cautions on bond market return

    Mahama confident in 2026 expansion as IMF cautions on bond market return

    As the International Monetary Fund (IMF) urges caution regarding Ghana’s return to the international bond market, President John Dramani Mahama is exuding confidence in the nation’s economic trajectory, outlining an ambitious roadmap for accelerated growth and expansion throughout 2026.

    The divergence in tone highlights a delicate balance between leveraging recent economic stability, bolstered by strong domestic investor sentiment and a rallying cedi, and heeding international advice to manage future fiscal risks carefully.

    The IMF’s Measured Warning

    Ghana’s government has signaled its intention to resume the issuance of treasury bonds in early 2026, a strategic move aimed at lengthening the average maturity of its debt and easing rollover risks following the 2023 domestic debt restructuring.

    However, the IMF, in recent advice to the government, has counselled a gradual and cautious approach. The international body points to a narrowing spread between bond yields and the central bank’s monetary policy rate. Furthermore, while the secondary bond market advanced strongly last week, the primary market for government paper has seen a receded appetite in recent auctions, a factor the IMF believes warrants prudence.

    Since the debt restructuring, treasury bills have been the primary source of budget financing. The IMF’s advice underscores a need to ensure sustainable market appetite before fully committing to larger bond issuances.

    Investor Confidence Remains High in T-Bills

    Despite the caution surrounding the long-term bond market, investor sentiment in short-term instruments remains robust. Data from the Bank of Ghana for the week of December 29, 2025, shows that Treasury bills were oversubscribed by 18.48%.

    Investors submitted total bids of GH¢3.91 billion, exceeding the Treasury’s target of GH¢3.30 billion. This strong demand, particularly for the 91-day bill, reflects a rebound in bank participation and suggests a high degree of confidence in the government’s short-term fiscal management. Interest rates edged up slightly across all maturities, indicating sustained market appetite.

    President Mahama Charts a Confident 2026 Roadmap

    In his New Year Message to the Nation on January 1, 2026, President Mahama focused squarely on expansion and delivery, signaling that the government is confident enough in its 2025 gains to accelerate reforms.

    The President outlined a broad agenda aimed at transforming key sectors:

    Social Services: Operationalizing Universal Health Coverage through the Free Primary Health Care Programme and continuing the digitalisation of schools.

    Agriculture and Energy: Transforming farming into a commercially viable sector and working towards a 30% share of renewable energy in the national mix to reduce costs.

    Governance: Intensifying the fight against corruption with “no sacred cows” and implementing recommendations of the Constitutional Review Committee.

    “The gains made in 2025 provide a foundation for building the Ghana that citizens desire,” the President stated, projecting a sense of certainty and control over the nation’s economic future that appears to contrast with the IMF’s more measured risk assessment.

    As Ghana navigates its recovery, the government faces the challenge of balancing its ambitious growth agenda and confidence in its own policies with the cautious, risk-averse guidance of its international partners.

     

    By Adnan Adams Mohammed

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

  • Target IDA for cheaper loans

    Target IDA for cheaper loans

    As part of its mandate in helping to shape the economic direction for growth of member nations, the World Bank has advised Ghana’s government to lean more on concessional external financing from institutions such as the International Development Association (IDA) rather than depending heavily on expensive domestic borrowing to finance capital projects.

    It asserts that, concessional IDA loans provide far more favourable terms than domestic Treasury-bill borrowing.

    Comparatively, using the short-term domestic financing market (T-bills), government’s financing cost an average interest rate of 27.4% between 2023 and 2024, while IDA regular and blended financing attracted interest and service fees between 0.75% and 2.0%, coupled with extended grace periods.

    “Even with recent declines in average domestic borrowing costs to 11.9% in September 2025, new IDA blend terms offer significantly lower rates at 1.5%, locked in for longer periods”, the Country Director for Ghana, Sierra Leone, and Liberia, Robert Taliercio, emphasised while speaking at the launch of the World Bank’s 2025 Policy Notes in Accra, last week.

    “So it’s an obvious choice in terms of using all IDA available before resorting to further domestic financing.”

    The 2025 Policy Notes outline Ghana’s structural challenges and recommend four strategic foundations for long-term growth and inclusive transformation.

    Most urgently it calls for restoring macro-financial stability through stronger domestic revenue mobilisation, sustainable public finances, and reforms in sectors such as energy and cocoa.

    Ghana’s tax mobilisation, at 13% of GDP in 2021, remains well below both its estimated tax potential of 21% and the Sub-Saharan African average.

    In the first half of 2025, revenue reached 7.1% of GDP against a 7.3% target.

    Consequently, the World Bank has outlined a new set of policy recommendations aimed at helping Ghana achieve long-term economic transformation, with a clear warning that urgent reforms are needed to secure sustainable growth and job creation.

    Despite Ghana’s significant progress made in the past in ensuring just economic development, cutting poverty in half between 1991 and 2016 and recording average growth of 6.8% between 2009 and 2019, in recent years, rising macroeconomic challenges – capped by a severe crisis which erupted in 2022 – have stalled progress.

    World Bank data indicates that, between 2012 and 2023, only 250,000 net jobs were created, mostly in low-productivity sectors.

    The World Bank has warned that without urgent reforms, fiscal pressures will deepen. For example, energy sector shortfalls cost the government US$1.4 billion in 2024, and are projected to reach US$2 billion by 2026 — funds that could otherwise support health, education, or infrastructure.

    Base on this factors, the World Bank in the 2025 Policy Notes outline four key pillars for transformation:

    1. Restore and sustain macro-financial stability by boosting domestic revenue mobilization, tackling fiscal stress, and advancing reforms in the energy and cocoa sectors.

    2. Raise productivity and competitiveness through investments in skills, health, and private sector growth, while reducing bottlenecks such as long business registration times and slow court processes.

    3. Sustain natural resource management and resilience with investments in climate-smart agriculture, agribusiness, and resilient infrastructure to diversify growth.

    4. Strengthen governance and public institutions to rebuild citizen trust and ensure the reforms are effectively implemented.

    However, Mr Taliercio notes that, with ambitious reforms Ghana could triple per capita income by 2050 and move decisively toward upper-middle-income status, adding that, flagship government initiatives such as the 24-Hour Economy and the Big Push could catalyze these reforms if executed effectively. “The choices Ghana makes now can unlock a generation of inclusive, resilient growth,” he said.

    The World Bank pledged its continued support, calling for stronger collaboration between government, the private sector, civil society, and international partners to drive the country’s transformation agenda.

    By Adnan Adams Mohammed