Predictable debt payments crucial for investor trust — Prof. Bokpin
Ghana’s recent coupon payment under the Domestic Debt Exchange Programme (DDEP) has been described as a major boost to investor confidence, coming at a time when the government is preparing to re-enter the bond market.
The Ministry of Finance last week cleared GHS9.7 billion in coupon arrears, bringing total debt service so far this year to GHS19.4 billion.
Economist Professor Godfred Bokpin says timely and predictable settlements are essential to rebuilding trust after the debt restructuring that rattled investor sentiment.
Speaking at Prudential Bank’s Special Customer Seminar on the appreciation of the cedi, Prof. Bokpin noted that credibility in the debt repayment roadmap is a necessary condition for Ghana to regain access to both domestic and international capital markets.
“If you look at what we have gone through with the debt restructuring and the fact that it has wounded confidence in the market, I think the predictability and the sustainability of keeping to the debt repayment roadmap is good for building confidence. Government itself is thinking about opening the bond market,” he said.
Prof. Bopkin cautioned, however, that only consistent fiscal discipline and transparency will guarantee success.
“You need this predictability to consolidate confidence so that we can open the bond market and hopefully the international capital market going forward. That will offer some kind of transition and flexibility for government’s fiscal operations and debt sustainability. Without access to these markets, it will be difficult to refinance the bullet payments that lie ahead in 2027 and 2028, in addition to financing government projects,” he noted.
Debt Restructuring and IMF Support
The Domestic Debt Exchange Programme, launched in late 2022 as part of Ghana’s IMF-supported economic reform plan, sought to ease the country’s near-term debt burden by restructuring obligations.
While it was necessary to secure the bailout, the DDEP significantly undermined investor confidence.
Finance Ministry officials say the latest coupon payment demonstrates the government’s unwavering commitment to honouring the Memorandum of Understanding signed with bondholders under the programme.
Sinking Fund Accounts
To further safeguard future debt repayments, the government has established two dedicated sinking fund accounts in line with the 2025 Mid-Year Fiscal Policy Review and the Public Financial Management Act, 2016 (Act 921), as amended.
These are the Cedi Sinking Fund Account and the US Dollar Sinking Fund Account. Both will serve as liquidity buffers to ensure timely redemption of bonds maturing in 2026, 2027 and 2028.
The Finance Ministry has assured both investors and the public that all subsequent debt obligations, including those under the DDEP, will be honoured fully and on schedule.
