World Bank Warns Ghana Against Premature Return to International Capital Markets

Robert Taliercio, the World Bank Country Director for Ghana, Liberia, and Sierra Leone, issued the warning during the launch of the World Bank’s latest Public Finance Review report, titled “Building the Foundations for a Resilient and Equitable Fiscal Policy.” He highlighted that an early re-entry could send negative signals to investors, undoing the progress made through Ghana’s recent debt restructuring efforts and exposing the country to unsustainable borrowing costs.

Mr. Taliercio acknowledged Ghana’s achievements under the $3 billion IMF Extended Credit Facility (ECF) programme, which included successful domestic and external debt restructuring that provided significant fiscal relief. However, he cautioned against complacency, urging Ghana to maintain fiscal discipline and avoid a return to “business-as-usual” 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,” Taliercio remarked. He emphasized that Ghana’s history of recurring financial instability underscores the importance of staying on track with fiscal reforms.

Taliercio warned that rushing back to international markets for dollar-denominated funding could undermine the nation’s recovery efforts. Such a move, he explained, might lead to a rise in borrowing costs and a reversal of the financial stability gained through the IMF-supported programme. “The move could trigger renewed financial instability and expose Ghana to unsustainable debt levels once again,” he added.

The World Bank’s Public Finance Review report recommends that Ghana focus on building a resilient and equitable fiscal policy to safeguard its recovery. Key recommendations include strengthening domestic revenue mobilization, enhancing public financial management, and reducing wasteful expenditures.

While the debt restructuring and IMF programme have created breathing space for the government, the World Bank cautions that this is only the beginning of a long-term recovery process. Avoiding pitfalls, such as premature borrowing, will be critical to ensuring sustainable growth and financial stability.