IMF warns Ghana of elevated financing needs due to large rollover of T-bills in 2027-28
According to its Country Report on Ghana, domestic debt vulnerabilities remain elevated, given the heavy reliance on treasury bills and large rollover needs in 2027-28.
The International Monetary Fund (IMF) has cautioned Ghana about elevated financing requirements, projected to reach over 16% of the country's Gross Domestic Product (GDP) in 2028. This increased burden is primarily due to the concentration of Domestic Debt Exchange Programme-related maturities scheduled for repayment in 2027-28. The report highlights that Ghana's reliance on treasury bills and the need for frequent rollovers of domestic debt in the upcoming years has heightened vulnerabilities.
The IMF underscores that the country's heavy dependence on short-term domestic instruments and financial institutions' substantial exposure to government securities further exacerbates these risks. It warns that the domestic market's ability to absorb additional borrowing might be constrained. To mitigate these risks, the IMF recommends a well-planned debt management strategy that aims to lengthen maturities gradually by increasing the issuance of Treasury bonds.
The strategy includes partial repayments through sinking funds funded by earmarking 7.0% of non-oil tax revenue and issuing Treasury bonds, alongside buybacks and rollovers through Treasury bills. The IMF also emphasizes the need to monitor non-resident participation in the domestic Treasury bond market, ensuring it aligns with the Debt Sustainability Analysis (DSA) parameters.
While non-resident participation can deepen the market, it also carries risks such as potential capital flow volatility and exchange rate pressures. The IMF stresses that continuous monitoring of this participation is crucial, with the flexibility to adjust external borrowing plans if inflows become unsustainable. Lastly, the IMF advocates for strengthening public debt reporting standards, aligning them with the General Financial Statistics Model (GFSM) 2014, and broadening coverage to include quasi-fiscal activities.
Enhanced inter-agency coordination is also essential to improve risk monitoring and inform borrowing decisions.
Written by urgent.news from Joy Business's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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