The Institute for Fiscal Studies (IFS) has cautioned the government against rushing back to the international bond market as a quick solution to the country’s ongoing fiscal challenges.
In its assessment of the 2025 Mid-Year Fiscal Policy Review released on Wednesday, August 20, the policy think tank observed that Ghana’s fiscal deficit outturns for the first half of the year appeared “unbelievably lower than expected.”
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According to IFS, one of the factors that helped reduce interest rates during the period was the decline in government borrowing. It warned that resuming external borrowing at this stage could sharply worsen Ghana’s already high debt burden.
“Resuming international borrowing will cause the already high debt level to sharply worsen, causing debt service costs to increase rapidly, as happened in the past,” the report stated.
Instead of seeking external debt, IFS urged government to prioritize domestic revenue mobilization and adopt more strategic measures in the extractive sector. It recommended a shift towards active state participation or production-sharing agreements in mining and oil operations, which would generate greater foreign exchange inflows and sustainably strengthen the cedi.
The Institute also criticized the GoldBod initiative, noting that the company merely buys and sells gold already produced without addressing the fiscal revenue shortfall. It argued that such an approach disregards the principle of public endowment of Ghana’s mineral resources.
IFS warned that the persistent revenue gap has constrained government financing, leading to delays in major capital projects under the 2025 budget, including the flagship Big Push development agenda.
Despite these concerns, Ghana’s economic performance in the first half of 2025 shows signs of recovery and stabilization compared to the difficult conditions of 2024. Key macroeconomic indicators — including economic growth, inflation, interest rates, external balance, and exchange rate movements — suggest the economy is gradually regaining momentum.