Ghana will use its New Economy programme to pursue an investment-grade rating, cut borrowing costs and boost corporate bonds, says Finance Minister Dr Ato Forson.
The programme aims to lower the country's borrowing costs and help Ghanaian businesses raise long-term financing. Dr Forson said Ghana's domestic bond market had largely ground to a halt in 2022.
Local banks lost access to credit lines in the wake of the country's debt default and the Domestic Debt Exchange Programme. Dr Forson said the country is now rated B and wants to get to investment grade. An investment-grade rating signals that a rating agency considers the risk of default relatively low.
This could bring Ghana's government bonds within reach of more institutional investors, including funds that can only buy bonds at or above a minimum credit rating. A wider pool of investors could help the government borrow at lower interest rates. The benefits could extend to Ghanaian businesses, with a stronger sovereign rating improving financing conditions for companies.
Dr Forson said reaching the investment-grade goal would require Ghana to keep its economy stable and predictable and show that it has the policies to sustain those gains. He outlined the New Economy agenda to boost local production and youth employment. Dr Forson spoke at a New Economy engagement in Accra, where he said the country wants to get to investment grade.
The New Economy programme is part of Ghana's efforts to recover from its debt default and restore investor confidence. The programme includes a US$9bn plan for 2027-2030, which aims to boost economic growth and create jobs. Dr Forson said the programme would help Ghanaian businesses raise long-term financing and expand production.
The Bank of Ghana has also taken steps to restore stability, including a 14% policy rate from May to September. The bank's governor said the policy rate protected stability and helped to restore investor confidence. Ghana's economy has been affected by the debt default and the COVID-19 pandemic, but the New Economy programme aims to put the country back on track.