The 2025 Budget Statement and Economic Policy, themed “Resetting the Economy for the Ghana We Want,” outlines the government’s strategic financial plan for the coming year and beyond. A key element of this plan revolves around managing and restructuring the nation’s debt portfolio, with a particular focus on reopening the domestic bond market and implementing liability management operations. The Minister of Finance, Dr. Cassiel Ato Forson, emphasized the importance of these measures in mitigating risks and establishing a more sustainable financial footing for Ghana.
The government’s approach to reopening the domestic bond market is characterized by a cautious and strategic approach. The goal is not merely to reopen the market, but to establish large-sized benchmark bonds. This strategy is aimed at enhancing market liquidity, a crucial factor in fostering a healthy and robust financial environment. Increased liquidity allows for smoother transactions, attracting more investors and facilitating more efficient price discovery. This approach will contribute to a more stable and predictable market, reducing volatility and promoting investor confidence.
Beyond reopening the domestic bond market, the government is committed to implementing robust liability management strategies. These strategies are designed to address the inherent risks within the existing debt portfolio, particularly focusing on Eurobonds. Managing the Eurobond debt portfolio will be a key priority from 2025 onwards. This proactive approach aims to prevent potential future crises and ensure the nation’s long-term financial stability. The government believes that a comprehensive liability management strategy is essential for reducing the overall risk profile of the nation’s debt.
A crucial aspect of the government’s debt management strategy is building sufficient cash buffers. These reserves will serve as a financial cushion, enabling the effective implementation of liability management strategies and smoothing the redemption profile. By having readily available funds, the government can proactively manage debt obligations and avoid potential disruptions in the financial markets. This proactive approach will mitigate refinancing and rollover risks associated with the debt portfolio, further enhancing financial stability and investor confidence.
Furthermore, the 2025 budget highlights a significant step towards strengthening public financial management: the operationalization of sections 37 to 44 of the Public Financial Management Act, 2016 (Act 921). This marks the first time these sections have been implemented since the Act’s passage in August 2016. These provisions focus on building sufficient buffers in the Sinking Fund, a dedicated financial instrument designed to manage and reduce public debt. This landmark reform underscores the government’s commitment to fiscal responsibility and long-term debt sustainability.
In summary, the 2025 Budget Statement outlines a comprehensive strategy for resetting Ghana’s economy through prudent debt management. Key elements of this strategy include cautiously reopening the domestic bond market to enhance liquidity, implementing liability management operations to mitigate risks, building cash buffers to smooth the redemption profile, and operationalizing key sections of the Public Financial Management Act to strengthen the Sinking Fund. These measures are designed to create a more stable and sustainable financial environment, paving the way for long-term economic growth and prosperity. The government’s focus on proactive debt management reflects a commitment to fiscal responsibility and building a stronger economic future for Ghana.
