By Ashiadey Dotse
The Government of Ghana will return to the local debt market next week with the sale of a seven-year bond, marking its first such move since the country defaulted on its debt in 2022.
According to Bloomberg, the bond sale will begin on March 30 with initial price guidance and is expected to close on April 1. The move is part of the government’s efforts to raise funds to support the national budget.
Finance Minister Cassiel Ato Forson is leading the process as the government seeks to rebuild confidence in the economy. Officials say improved economic conditions are expected to attract investors.
The Government of Ghana is relying on recent gains, including a drop in inflation to 3.3 percent, which is close to a 30-year low. The Bank of Ghana has also reduced its policy rate significantly, cutting it by 14 percentage points since July to 14 percent.
President John Dramani Mahama’s administration believes these measures, along with improved foreign reserves and a more stable cedi, will encourage both local and international investors to participate in the bond sale.
According to Citi News, some analysts say the bond may not be very attractive to foreign investors due to falling market rates. Samir Gadio of Standard Chartered noted that while returns may be lower, Ghana could still appeal to investors looking to diversify their portfolios.
The Finance Ministry said the return to the bond market is aimed at re-establishing a domestic funding programme, rebuilding the country’s yield curve, and restoring investor confidence.
The amount to be raised from the bond sale will be determined once the process begins. The government is targeting about 20.2 billion cedis this year from longer-term securities ranging from seven to ten years.
Ghana suspended most of its debt payments in December 2022 and began restructuring its debt to secure a $3 billion bailout from the International Monetary Fund. The restructuring programme limited the country’s access to financial markets, but that restriction expired earlier this month, allowing Ghana to return to borrowing.
