Financial analyst Dr. Richmond Atuahene has cautioned that Ghana’s plan to re-enter the domestic bond market risks destabilizing its fragile economic recovery, citing unresolved fallout from the country’s recent debt crisis.
The warning comes as the government seeks to resume borrowing through local bonds despite lingering investor distrust following a historic 2022 debt restructuring.
Ghana defaulted on $28.4 billion in external debt in late 2022 and restructured 89% of its domestic debt—nearly GHS 203 billion—under a program officials said saved GHS 60 billion and secured a $3 billion IMF bailout. However, the move severely weakened banks, paralyzed private-sector credit access, and eroded confidence in state debt instruments. While authorities aim to revive bond sales as part of fiscal reforms, Dr. Atuahene argues the timing could deepen economic strains.
“Reintroducing government bonds now would force unsustainable borrowing costs and risk another crisis,” he stated in a research paper reviewed by *The High Street Journal*. “Investors haven’t forgotten the losses they absorbed. Without restored trust, markets will demand prohibitively high rates.”
Data shows Ghana’s debt-to-GDP ratio remains near 85%, far above the IMF’s 55% target for 2028. Dr. Atuahene warns that premature bond issuance could spike borrowing costs across the economy, exacerbating capital flight and unemployment. He urges adherence to IMF benchmarks, including reducing external debt service to 18% of revenue, before considering new debt sales.
The analyst’s concerns highlight a broader credibility challenge. Domestic bondholders faced average haircuts of 30% during restructuring, while pension funds and banks saw liquidity dry up. Though the debt exchange averted immediate collapse, Dr. Atuahene notes banks now avoid government securities, starving productive sectors of credit. “The system remains broken,” he said. “Rushing back to bonds without fiscal repair risks permanent damage.”
Instead of bond sales, Dr. Atuahene advocates aggressive revenue mobilization, spending cuts, and economic diversification to stabilize finances. He emphasizes that meeting IMF targets by 2028 would signal commitment to sustainable growth, potentially rebuilding investor appetite.
Economic observers note Ghana’s dilemma mirrors past debt crises in emerging markets, where premature returns to capital markets often backfired. While bond sales could offer short-term liquidity, analysts stress that lasting recovery hinges on transparent governance and measurable progress toward debt targets. For now, the government faces a pivotal choice: prioritize immediate financing or nurture the patient reforms needed to restore market faith.
As Dr. Atuahene concludes, “This isn’t just about bonds—it’s about whether Ghana learns from its history or repeats it.”
