‘Rushing back to capital markets could be costly’ – World Bank warns Ghana

• Posted on February 13, 2025February 13, 2025
• by Nana Kwesi Coomson
• Comment

World Bank Country Director for Ghana, Liberia, and Sierra Leone, Robert Taliercio, has cautioned Ghana against making a premature return to international capital markets, warning that such a move could undermine the country’s recent economic recovery.

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,” he stated that an early return could send negative signals to investors, leading to a reversal of gains made under Ghana’s debt restructuring efforts and exposing the nation to unsustainable borrowing costs.

His warning follows Ghana’s successful restructuring of both domestic and external debts, which secured significant relief under the $3 billion IMF Extended Credit Facility (ECF) programme.

While acknowledging these achievements, Taliercio cautioned against complacency, noting that Ghana has had a history of falling back into unsustainable financial practices.

“The risk now is falling into complacency with these achievements and returning to a business-as-usual mindset – a recurring error in the past. Ghana has requested a record 17 IMF programs and has been under active IMF supervision for 40 out of its 68 years of independence,” he noted.

He further stressed that rushing back to international markets for dollar funding could be counterproductive, potentially triggering a return to high borrowing costs and renewed financial instability.

Since 2022, Ghana has been locked out of international capital markets due to soaring debt levels, sluggish economic growth, and a weak balance of payments.

While the country is eager to regain investor confidence, the World Bank warns that timing and fiscal discipline will be critical in ensuring long-term economic stability.