Gov’t signals return to longer-term borrowing, as DDEP restrictions expire

By Joshua Worlasi AMLANU

The government will resume longer-term domestic bond issuance after the expiration of restrictions imposed during the Domestic Debt Exchange Programme (DDEP), marking a shift in its post-restructuring debt strategy.

The reopening of the domestic bond market signals a transition from crisis management to active debt portfolio restructuring. While the strategy prioritises maturity extension and cost management, investor appetite for longer tenors and prevailing interest rate conditions is expected to shape the pace and pricing of issuance in 2026.

The Ministry of Finance on Monday announced the end of the three-year restriction on new domestic bond issuance, a measure introduced in 2023 following the sovereign debt default that preceded the DDEP.

The ministry in a statement said the decision reflects improved macroeconomic conditions, including lower inflation, stronger investor confidence and progress under a medium-term debt management framework.

The expiration clears the way for the government to reduce its reliance on short-term Treasury bills and reintroduce longer-dated instruments to the domestic market. Officials said this would support efforts to lengthen maturities, lower refinancing risks and rebuild a transparent yield curve.

In the 2026 Budget, the government confirmed that benchmark bond issuance will resume this year as part of the 2025–2028 Medium-Term Debt Management Strategy (MTDS). The strategy is aligned with the IMF Extended Credit Facility programme and is designed to meet financing needs at the lowest possible cost within prudent risk levels.

“After two years of restructuring and adjustment, we will resume benchmark bond issuance in 2026 to rebuild investor confidence, support liquidity, and set a transparent yield curve for pricing government securities,” the finance minister said in the budget statement.

The ministry said that since 2025 the government has honoured every coupon payment and obligation under the restructured bonds, underscoring what it described as fiscal discipline and a commitment to responsible debt management. By end-2024, 93.5 percent of Ghana’s total public debt had been restructured, including US$20.4 billion in domestic notes and bonds, US$13.1 billion in Eurobonds and US$5.2 billion in bilateral debt. The remaining 6.5 percent, mainly commercial debt, is still under negotiation.

The MTDS sets specific benchmarks to manage risks. Debt maturing within one year is to remain within 15±5 percent of total debt, average time to maturity at eight years or more, and Treasury bills capped at 20±5 percent of domestic debt. US dollar-denominated debt is not to exceed 70 percent of external debt.

For 2026, the government projects a fiscal deficit on a commitment basis of GH¢34.4 billion, equivalent to 2.2 percent of GDP, with a primary surplus of GH¢23.3 billion, or 1.5 percent of GDP. On a cash basis, the deficit is estimated at GH¢64.2 billion, or 4.0 percent of GDP.

Domestic financing is projected at GH¢71.0 billion, representing 4.4 percent of GDP, to be sourced mainly through long- and short-term securities. Foreign financing is projected as a net repayment of GH¢6.6 billion, including disbursements of US$360 million from the IMF and US$313.2 million from the World Bank and other bilateral partners.

As part of the renewed domestic issuance programme, Ghana plans to raise GH¢10 billion in infrastructure bonds in 2026 under the “Big Push” initiative. The bonds will be issued in two GH¢5 billion tranches in the second and fourth quarters, structured as 10-year and 15-year instruments. Expected coupon rates are around 13.5 percent for the first tranche, with the bonds designed to be tax-exempt and backed by project revenues.

Officials said liability management operations, including buybacks and bond exchanges, will be used to smooth the maturity profile and reduce rollover pressures. The Ghana Sinking Fund has been reactivated with dedicated cedi and dollar accounts to provide buffers for future repayments, managed by the Bank of Ghana under a defined operational framework.

The government has also reformed the Primary Dealer and Bond Market Specialist framework. Only institutions meeting financial and governance standards were qualified, with quarterly performance reviews aimed at improving transparency and price discovery.

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