Take Lessons From The Bank of Ghana’s Gold Purchase Programme, Avoid International Bond Market - IFS to Mahama

The second crisis, which hit in 2022, was caused by a rapid build-up of both external and domestic debt over the previous decade. However, its immediate trigger was Ghana’s loss of access to the international bond market in early 2022 after multiple credit rating downgrades pushed the country’s bonds into junk status. The IFS noted that the process of restructuring external debt was far more complex and time-consuming than addressing domestic debt, further worsening the crisis.

IFS emphasized the importance of preventing another foreign debt crisis at all costs. The think tank pointed out that in the last three years, Ghana has managed to operate without international borrowing by reducing fiscal deficits and leveraging natural resources like gold to build reserves.

IFS recommends that the government maintain a low fiscal deficit to reduce borrowing needs and continue exploring self-reliant economic strategies.

“The government should learn lessons from the past three years in which the country has carried on without borrowing from the international bond market,” the report stated.