Investors concerned over heavy reliance on costly short-term funding – Report

Despite a recent marginal uptick in Ghana's economic recovery, the over-reliance on comparatively expensive short-term funding is raising concerns among investors.

According to a Reuters report that cited six analysts and investors, Ghana risks repercussions from the domestic debt restructuring exercise, which is casting a shadow of doubt over longer-term economic recovery.

The analysts who spoke with the portal believe that the debt restructuring exercise has decimated the local bond market, forcing the government to rely heavily on short-term and more costly Treasury bills while raising debt through private placements.

"The reliance on comparatively expensive short-term funding worries investors, and raising further debt via private placements, whose pricing is often opaque, adds to concerns over government debt sustainability," the six analysts and investors told Reuters.

They pointed out that the government could struggle to convince buyers when it tries to tap local markets in 2025 for longer-term borrowings.

Additionally, Chief Investment Officer with Accra-based SAS Investment Management, Daniel Ankomah, told Reuters, "There's little appetite whatsoever to gamble in government debt, no matter how high or compensatory the rates are."

"It's a matter of market confidence, and it will take a while alongside the economic recovery. To come back to where we were, we may need a decade or more," Ankomah added.

Meanwhile, Ghanaians will head to the polls to elect a new president on December 7, 2024 – with investors remaining cautious about risks and the government's tendency to spend heavily during election years.

MA

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