Ghana plans to resort to sovereign bonds amounting to GH₵9.6 billion (about $2 billion) in the framework of a strategy to cover the 2019 budget deficit, Ecofin Agency learnt from the draft bill submitted by the government to the parliament.

Overall, Ghana is to borrow up to GH₵15 billion on the international market. Indeed, apart from the sovereign bond, GH₵4.1 billion of project loans and GH₵1.2 billion of program loans are planned in the framework of the strategy. The country also wants to refund the equivalent of GH₵5.3 billion of international debt.

The country’s net borrowing (new borrowings minus loans refunded) from international investors is about GH₵9.6 billion. Let’s note that the president Akufo-Ado is really following his ambitions to reduce his country’s depency on international backers.

In that regard, international loans should considerably decrease to reach GH₵2 billion by 2022 while the trade deficit which will remain high will be increasingly funded by loans from local commercial banks and domestic savings. By the way, local non-banking fundings are planned to rise from GH₵1.7 billion in 2019 to GH₵10.5 billion in 2022. To do so, it will have to maintain a strong economic dynamism. For the time being, Ghana is far from reproducing its strong 2017 performance. Its nominal GDP grew by 5.4% only by the period ended September 2018 and by 4.6% for nominal non-oil GDP.

Recourse to domestic savings could also be affected by a reduction in the purchasing power due to the rise in the price of food products.

Idriss Linge