The World Bank Country Director for Ghana, Liberia, and Sierra Leone, Robert Taliercio, has cautioned Ghana against rushing back to international capital markets, describing such a move as premature and potentially risky. His warning comes at a time when Ghana has made progress in restructuring its debts, but concerns remain about the sustainability of its borrowing practices.
Speaking at the launch of the World Bank’s latest Public Finance Review report, titled “Building the Foundations for a Resilient and Equitable Fiscal Policy,” Taliercio emphasized that an early return to borrowing on international markets could undermine Ghana’s economic recovery. He explained that such a move might send negative signals to investors, leading to a loss of confidence and a possible reversal of the gains Ghana has made under its debt restructuring efforts.
“The risk now is falling into complacency with these achievements and returning to a business-as-usual mindset – a recurring error in the past,” he stated. “Ghana has requested a record of 17 IMF programs. As a result, the country has been under active IMF programs for 40 out of 68 years of its history.”
He further warned that Ghana’s economic challenges stem from a cycle of excessive borrowing, which has repeatedly forced the country into IMF support programs. While the recent restructuring of both domestic and external debts has provided much-needed relief, Taliercio stressed that maintaining fiscal discipline is critical to ensuring long-term economic stability.
“A premature return to international capital markets could send the wrong signal to markets and a reversal to unsustainable borrowing costs,” he added.
Ghana’s debt restructuring efforts were key to securing financial relief under the $3 billion International Monetary Fund (IMF) Extended Credit Facility (ECF) programme. The deal was aimed at stabilizing the country’s economy, restoring investor confidence, and creating a path toward sustainable debt management. However, any hasty move to re-enter global debt markets could undo the progress made, forcing Ghana into another cycle of unsustainable debt.
Since 2022, Ghana has been effectively locked out of international capital markets for dollar funding due to its high debt burden, slow economic growth, and balance of payments challenges. Investors have been reluctant to lend to the country, citing concerns over its ability to manage and service its debts.
The debt crisis was exacerbated by a combination of excessive borrowing, revenue shortfalls, and external economic shocks, including the COVID-19 pandemic and global inflationary pressures. These factors contributed to Ghana’s inability to meet its debt obligations, leading to a default on some of its external debts and triggering the need for restructuring.
As part of the restructuring process, Ghana has negotiated with both domestic and international creditors to ease its repayment obligations. The government has also implemented economic reforms aimed at improving revenue collection, cutting expenditures, and ensuring more prudent financial management. The IMF-backed program is expected to provide Ghana with financial support while enforcing economic discipline to prevent future fiscal crises.
Despite these measures, the temptation to return to borrowing remains strong, particularly as the government seeks to finance development projects and address pressing economic challenges. However, experts argue that any return to the international capital markets should be carefully timed to avoid jeopardizing Ghana’s economic recovery.
A leading Ghanaian economist, who preferred to remain anonymous, echoed Taliercio’s concerns, warning that Ghana must learn from its past mistakes and avoid falling into another debt trap.
“The World Bank’s warning is timely. Ghana’s economic history is filled with cycles of borrowing, debt accumulation, and eventual crisis. If the government does not exercise caution, we could find ourselves right back where we started,” he said.
He advised that Ghana should focus on strengthening domestic revenue mobilization and enhancing fiscal discipline rather than seeking quick fixes through external borrowing.
“The solution is not in rushing back to the capital markets but in building a stronger domestic economy that can generate sufficient revenue to fund national development. We need to improve tax collection, cut wasteful spending, and promote economic activities that generate sustainable income,” he added.
The World Bank’s Public Finance Review report also highlighted the need for Ghana to adopt policies that promote fiscal resilience and equitable economic growth. The report stressed the importance of reducing the country’s reliance on external borrowing while strengthening domestic financial management systems.
It further called on the government to implement structural reforms aimed at improving efficiency in public expenditure, enhancing transparency in financial management, and promoting private sector-led growth. The report suggested that these measures would help Ghana achieve long-term financial stability and reduce its dependence on international lenders.
Ghana’s Finance Ministry has yet to officially respond to the World Bank’s caution, but sources within the government suggest that discussions are ongoing regarding the country’s financing options. While some officials believe that Ghana should wait before returning to international markets, others argue that selective borrowing could help fund critical development projects without jeopardizing fiscal stability.
Meanwhile, opposition parties have used the World Bank’s warning to criticize the government’s handling of the economy. The National Democratic Congress (NDC) has accused the ruling party of mismanaging Ghana’s finances, leading to the country’s current economic difficulties.
“We have warned the government several times about reckless borrowing, and now the World Bank is saying the same thing. The government must take responsibility for its actions and ensure that Ghana does not fall into another economic crisis,” an NDC spokesperson stated.
On the other hand, government supporters argue that while borrowing should be done cautiously, Ghana still needs external financing to support infrastructure development, job creation, and economic growth. They contend that strategic borrowing, coupled with sound economic policies, could help the country navigate its financial challenges.
As Ghana weighs its options, financial analysts suggest that the government should focus on building investor confidence by demonstrating fiscal discipline and implementing sustainable economic policies. They argue that a well-managed economy will naturally attract investment without the need for excessive borrowing.
“The best way to regain access to capital markets is by showing investors that Ghana is serious about economic reform. If we get our policies right, investors will come looking for us, rather than us chasing after them,” a financial expert commented.
For now, Ghana faces a critical decision on whether to heed the World Bank’s warning or proceed with plans to re-enter the capital markets. With the stakes high, the government must carefully balance its short-term financing needs with the long-term goal of achieving economic stability.
