The government of Ghana has planned to borrow GH¢611.94 million through the issuance of fresh bonds between July and September this year. This is lower than the GH¢2 billion expected fresh funds issued between June and August 2021. The reduction could be as a result of the government’s intention to cut its borrowing amid the growing concerns over rising public debt stock.

Overall, government plans to issue a gross amount of GH¢23.230 billion, of which GH¢22.618 billion is to rollover maturities.

However, government plans to raise a chunk of the funds through the issuance of the 91-day Treasury bill, about GH¢11.1 billion. Also, government is expected to raise GH¢4.3 billion from the issuance of the 2-year bond during the period. Furthermore, the government is expected to raise GH¢2.78 billion from the issuance of the 182-day T-bills.

Government to borrow more in September

Meanwhile, as part of the government’s efforts to lengthen the maturity period, government will issue GH¢1.0 billion 15-year bond and GH¢1.8 billion 10-year bond. Moreover, in terms of monthly borrowing targets, the government is expected to borrow more in September 2021 in which a total of GH¢9.35 billion is expected to be raised. In August, the government will borrow GH¢5.78 billion and GH¢1.8 billion in July

The new funds are expected to finance government projects outlined in the 2021 Budget. Meanwhile, the Ministry of Finance indicated that the issuance calendar takes into consideration Government’s liability management programme. It also considers market developments, both domestic and international, as well as the Treasury & Debt Management objective of lengthening the maturity profile of the public debt.

Government assures all stakeholders and the general public that it continues to strive for greater predictability and transparency in the domestic bond market. The government intends to update the Issuance Calendar on a monthly rolling basis, to reflect a full quarter financing programme.

Rising public debt

Currently, Ghana’s public debt stock stands at ¢304.6 billion at End-March 2021, representing 70.2% of the country’s Gross Domestic Product (GDP). Earlier this month, Finance Minister, Ken Ofori-Atta, hinted that the government is preparing to issue sustainable bonds (green and social) to the tune of $2 billion by November 2021. This forms part of the $5 billion borrowing from the capital market for 2021 as approved by parliament.

Even though the debt to GDP ratio is a little over the 70% sustainability threshold, of major concern is the chunk of the nation’s revenues that are used to service the debts. About 49.5% of government’s projected budget revenues for 2021 is expected to be used to service interests on loans. But government had already spent approximately GH¢15.6 billion on interest payments on debts taken and compensation of public sector workers.

Meanwhile, Fitch Ratings has warned that Ghana’s interest payments on its borrowings will increase to 53 percent of total revenues in 2021. According to the Rating Agency, this will be driven mainly by the projected increment in interest payments on domestic debt issuance.