In the first quarter of 2022, government is seeking to borrow about GH¢3.79billion in new issuances on the domestic debt market.
Per the Bank of Ghana’s notice on the issuance calendar from January to March 2022, this targetted amount – although subject to monthly revision – is to meet government’s financing requirements during the first quarter.
The Issuance Calendar indicates that government plans to issue a gross amount of GH¢24.5billion, of which about GH¢20.71billion is to rollover maturities while the remainder is meant for government’s financing requirements.
In January 2022, a total of GH¢9.3billion has been targetted for issuance across the various maturities thus: 91-day, 182-day and 364-day Treasury bills, as well as 3-year and 6-year Treasury bonds. During February and March 2022, a total of GH¢7.55billion and GH¢7.65billion have been planned respectively for issuance across different maturities.
According to the 2022 budget, the public debt as a percentage of GDP stood at 77.8 percent at the end of September 2021 – up from 76.1 percent at the end of December 2020, reflecting the impact of the COVID-19 pandemic, financial sector clean-up costs, and energy sector IPP payments.
Despite the elevated public debt to gross domestic product (GDP) ratio, government’s medium-term fiscal strategy starting in 2022 is targetting to achieve a reasonable primary surplus to stabilise debt in the medium-term; which will, over time, reduce borrowing costs.
Financing the 2022 fiscal deficit of about GH¢37.01 billion – equivalent to 7.4 percent of GDP – from domestic sources, including net issuances from debt, will amount to GH¢27.92 billion – equivalent to 5.6 percent of GDP.
Nonetheless, government expects to reduce domestic borrowing needs by deploying exceptional financing through the use of newly allocated Special Drawing Rights (SDRs) by the International Monetary Fund (IMF).
Of the GH¢341.76billion (US$58.24billion) total debt as of end-September 2021, domestic debt comprises GH¢178.11billion (US$30,351.8million), representing 52.1 percent of the public debt. In 2022, the interest payment is projected at GH¢37.45billion – equivalent to 7.5 percent of GDP, of which domestic interest due will constitute about 77.3 percent amounting to GH¢28.94billion.
However, to reduce the cost of borrowing, government has signalled plans to continue exploring options for reprofiling domestic debt in 2022.
Debt Management Strategy
The Medium-Term Debt Management Strategy for the period 2022 – 2025 seeks to meet government’s funding needs on a timely basis and at a relatively lower cost, subject to prudent levels of risk; promote the development of efficient primary and secondary markets; and pursue any other action considered to impact positively on the public debt stock.