IMF Cautions BoG against costly borrowing
The International Monetary Fund (IMF) has urged the Ghanaian government to avoid returning to costly borrowing practices as it continues to support efforts to restore macroeconomic stability under its current programme.
Speaking in a media interview monitored by the New Finder Newspaper, Dr. Adrian Alter, the IMF Resident Representative to Ghana, emphasized the need for caution in government borrowing to prevent repeating past mistakes of high and expensive debt accumulation.
“On the borrowing side, we have advised the government to be extremely prudent—not to go back to the same mistakes of excessive and expensive borrowing in the past,” Dr. Alter stated.
He further recommended that Ghana should prioritize concessional financing from multilateral institutions like the World Bank, the African Development Bank (AfDB), and the IMF, instead of relying on international capital markets where borrowing costs remain elevated.
“When you have available concessional financing from multilateral agencies like the World Bank, the African Development Bank, and the IMF loan on concessional terms, you shouldn’t go to the international market where the interest rates are currently extremely pricy,” he added.
Dr. Alter acknowledged slight easing in global financial conditions but warned that interest rates continue to be high. He noted that Ghana’s current credit rating means international borrowing could come with interest rates around 10 percent or higher.
The IMF programme enforces specific limits on external borrowing to safeguard debt sustainability and ensure compliance with creditor agreements. Currently, the government’s financing mix is about 70 percent domestic borrowing and 30 percent external borrowing, according to Dr. Alter.
He also revealed that the IMF is backing initiatives to extend the maturity of domestic debt instruments, which now average about one year, to help strengthen the local debt market.
Expressing optimism, Dr. Alter said, “By early 2026, Ghana’s domestic bond market could reopen, providing a more stable and diversified financing environment.”
Ghana remains under a three-year Extended Credit Facility (ECF) arrangement with the IMF, focused on restoring macroeconomic stability, ensuring debt sustainability, and promoting inclusive growth.
