Financial analysts are expressing cautious optimism about Ghana’s prospects of returning to the domestic bond market, but warn that success hinges on the government’s commitment to cutting back expenditure and sustaining disinflation efforts.
Chief Executive Officer of Dalex Finance, Joe Jackson, says while current trends in treasury bill rates are encouraging, a credible return to the secondary market through the issuance of local bonds will depend on whether government can maintain fiscal discipline.
“We can return to investing in local government bonds but we must do so with our eyes open: watching inflation, monitoring the government’s commitment to reducing expenditure and observing efforts to keep the cedi stable. If the government stays on this path, there is no reason we shouldn’t begin investing in local bonds again,” he explained.
According to him, it is time to reduce the country’s heavy reliance on treasury bills, which were originally designed as a short-term financing tool—not a permanent solution for government borrowing.
“First of all, T-bills were only meant to be a temporary way of financing a cash flow deficiency in the government’s finances. T-bills were never meant to be the method for raising funds for development or other long-term purposes,” he added.
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