The Head of Africa Research at Standard Bank Group, the parent company of Stanbic Bank, Jibran Qureishi, has explained the reasoning behind Ghana’s cautious return to the bond market.
According to him, it is unsustainable for the government to rely solely on Treasury bills (T-bills) to finance its operations.
The Finance Minister, Dr Cassiel Ato Forson, while presenting the 2025 budget, hinted at the government’s plan to reopen the domestic bond market. He explained that the reopening will be executed cautiously to establish large-sized benchmark bonds that will enhance market liquidity.
Even though the International Monetary Fund (IMF) had reservations due to the risk of the DSA being negatively impacted, Mr Qureishi, while speaking at the Stanbic Economic Series Webinar under the theme “The Economy Under a New Era,” described it as a positive development.
Highlighting the critical role of a functional bond market, he noted that bonds support Ghana’s economic recovery and long-term fiscal stability.
“Financing government operations solely through T-bills is not sustainable. Since the domestic debt exchange programme in 2022, Ghana’s bond market has remained dormant, with no new issuances or re-tapping of existing bonds.
"This has significantly reduced net portfolio investment, as reflected in the country’s balance of payments. Reviving the bond market is essential to attract investment and ensure liquidity in the financial system,” he explained.
Mr Qureishi further indicated that the government’s reliance on T-bills has created a liquidity crunch in the secondary bond market.
“Post the domestic debt exchange programme, existing bonds were shifted from trading books to hold-to-maturity books, making the secondary bond market highly illiquid. Even if investors wanted to buy Ghanaian bonds, there simply wasn’t enough supply or scale to meet demand,” he stated.
However, he expressed optimism about the government’s recent steps to reopen the bond market. “We are likely to see a cautious reopening of Ghana’s bond market in the coming months. This is a positive development, as it will provide much-needed liquidity and attract portfolio investors who are eager to re-enter the market,” he said.
He also highlighted the importance of balancing fiscal sustainability with investor confidence. “While the IMF has expressed concerns that reopening the bond market could complicate debt sustainability analysis by categorising offshore investments as external debt, it is crucial to strike a balance. A functional bond market is vital for long-term economic stability and growth,” he added.
Latest Stories
-
Fuel prices to fall from June 16 due to postponement of GH¢1.0 levy
1 hour -
PassionAir assures passengers after Kumasi–Accra flight encounters turbulence
2 hours -
Fatherhood Beyond Finances: Two drivers inspire a rethink on presence, bonding and recognition
3 hours -
President Mahama urges protection of fuel price gains amid Middle East tensions
3 hours -
Republic of Rogues: Where Thieves Have Heads and the System Has None
3 hours -
Musah Mohammed donates jerseys and footballs to youth teams in Nkawkaw
4 hours -
Omane Boamah urges youth to persevere, recounts dramatic admission struggle at POJOSS
4 hours -
Minority unhappy over suspension of fuel levy, demands full repeal
5 hours -
Helicopter carrying Hindu pilgrims crashes in India, killing seven people
5 hours -
Council of State member urges Ghana to localise global solutions for youth employment
5 hours -
CAS overturns FIFA ruling and awards Right to Dream development fees from Ernest Nuamah’s transfer
5 hours -
Hitz Praise Zone: Nii Noi launches new gospel show on Hitz FM
6 hours -
BOAD reaffirms commitment to energy transition and sustainable agriculture in West Africa
7 hours -
10 kinds of women who have denied men the joy of fatherhood
8 hours -
A father’s hurdles caring for son with Sickle Cell disease – John Dzido shares a fraction
8 hours