Keypoints:
- Mahama warns against hasty Eurobond return
- Ghana posts surplus after years of deficits
- A break from past debt-driven governance
PRESIDENT John Dramani Mahama’s declaration that Ghana will not hastily return to the international bond markets is more than a fiscal policy stance. It is a symbolic break with a political economy defined for nearly two decades by repeated external borrowing.
Speaking at a media encounter in Accra on Wednesday, Mahama told journalists that the country must first consolidate recent gains before attempting another Eurobond issue. ‘Who could have imagined a few years ago that Ghana’s economy could run without external borrowing? And yet, here we are,’ he said.
Ghana has managed a rare surplus in its primary balance, moving from negative 3.4 percent to positive 1.1 percent in just over a year. The government expects to exceed its 1.5 percent target by the end of 2025. For Mahama, the lesson is clear: ‘Discipline in expenditure works. As president, I do not favour a quick return to the international capital market.’
Debt as default policy
Ghana’s history with Eurobonds has been turbulent. In 2007, under President John Kufuor, Ghana became the first sub-Saharan African country outside South Africa to issue a Eurobond, raising $750 million. That pioneering moment was framed as a sign of financial maturity.
But what followed was less a symbol of maturity than an addiction. Subsequent governments turned repeatedly to the markets. The Mahama administration itself raised several bonds during its earlier term, but it was under Nana Akufo-Addo that borrowing accelerated sharply. Between 2017 and 2021, Ghana raised over $13bn through Eurobonds, fuelling infrastructure projects but also populist programmes.
The political logic was simple: the markets provided fast money that allowed governments to plug fiscal holes or fund headline projects without the slow grind of tax reforms. But this reliance came at a price. By 2022, Ghana had defaulted on most of its external debt after debt service consumed more than half of government revenues.
The collapse of market confidence
The 2022 default closed the capital markets to Ghana and forced it into a bruising restructuring process with bondholders and bilateral creditors. Market access evaporated overnight, while the country turned to the International Monetary Fund for a bailout.
For many Ghanaians, the collapse of market confidence exposed how unsustainable debt-driven governance had become. It also revealed how successive administrations had failed to diversify revenue streams or enforce fiscal discipline.
The symbolism of Mahama’s refusal to return too soon is therefore powerful. It suggests that Ghana is learning from past mistakes, or at least willing to project that lesson to both citizens and investors.
Consolidation versus temptation
Historically, Ghana has rushed back to the bond markets as soon as credit ratings improved or commodity prices recovered. Mahama is trying to resist that temptation. By emphasising consolidation, he is signalling to investors that Ghana is seeking long-term credibility rather than quick cash.
This approach carries risks. Without external financing, the government must rely heavily on domestic resources, which could crowd out private sector borrowing. But it also carries a message of discipline that markets, weary of Ghana’s past borrowing spree, may ultimately reward.
Breaking with the past
This posture marks a sharp departure from the pattern of previous governments, including Mahama’s own earlier tenure. What is striking is not that Ghana wants to return to discipline — every government says that. What is striking is that Mahama appears determined to delay gratification, to prove that the state can function without running to investors at the first sign of recovery.
For a country once celebrated for pioneering African access to global capital, then vilified for its debt default, this recalibration matters. It speaks to a broader attempt to reset the political economy — one that relies less on debt-fuelled spending and more on fiscal prudence.
Investors watching closely
Global investors are watching Ghana’s moves with cautious optimism. Credit ratings have inched upwards, and bond prices have stabilised. Yet analysts warn that rushing back to markets now could undo fragile gains.
By waiting, Ghana hopes to demonstrate credibility. If successful, the strategy could lower future borrowing costs and restore investor confidence on more sustainable terms. But the window is narrow: political cycles and public expectations could pressure the government into loosening fiscal discipline.
A reset, not a retreat
Mahama’s stance is not a permanent retreat from global capital markets. Ghana will need external financing for infrastructure and development. But by delaying the return, the president is reframing borrowing as a strategic tool, not a default reflex.
This is as much about politics as economics. After years of defaults, debt crises, and IMF interventions, Mahama wants to show that Ghana can live within its means — at least for now. Whether this discipline endures will determine if the country’s long relationship with debt has finally entered a new, more sober phase.
