Public Debt Management
The primary legislative instrument which creates and supports the legal framework for public debt management in Ghana is the 1992 Constitution of the Republic of Ghana.
The secondary legislative enactments which also provide guidance and support in the management of public debt in Ghana are the:
- Public Financial Management Act, 2016 (Act 921);
- Public Financial Management Regulations, 2019(L.I. 2378);
- Fiscal Responsibility Act, 2018 (Act 982);
- Public Procurement Act, 2003 (Act 663) as amended by the Procurement (Amendment) Act, 2016 (Act 914);
- Securities Industry Act, 2016 (Act 929); and
- Securities Industry Regulations, 2003 (L.I 1728).
The coming into force of these legislature requires increased accountability and transparency in areas relating to public financial management which includes public debt management.
The objective of public debt management is to ensure that the government’s financing needs are met on a timely basis, borrowing costs to government are as low as possible consistent with a prudent degree of risk, and the Ghanaian debt market is developed.
Debt Management Strategy
Government’s Debt Management Strategy is approved by Cabinet. The formulation of the debt management strategy with respect to borrowing from external and domestic sources is based on the debt management objectives and considers:
- the costs and risks embedded in the current debt portfolio;
- future borrowing requirements and debt recovery mechanism;
- the macro-economic framework of the country;
- prevailing market conditions; and
- pursuing any other action(s) considered to impact positively on the public debt stock.
To effectively implement the debt management strategy, the Annual Borrowing Plan (ABP) is prepared based on the approved debt management strategy and issuance calendars are published to inform investors. The key instruments available for raising domestic resources are short-term government securities (91-day, 182-day and 364-day Treasury Bills), as well as medium and long-term instruments (2-year, 3-year, 5-year, 10-year, 15-year and 20-year bonds). The institutional mechanism used to issue government debt securities is the Primary Dealer System.
Primary Dealer System
The Ghana Primary Dealer (PD) System was established in 1996 with the purpose of broadening the investor base, and improving transparency and liquidity in the secondary markets, by giving certain rights and obligations to a group of professional intermediaries. The PD system is regulated by “The Guidelines and Requirements and Responsibilities of Primary Dealers 2015”. This guideline has been revised to include the introduction of the Bond Market Specialist (BMS) system to replace the Joint Book Runners (JBRs) group under much stricter rules, requirements, and obligations. Under the revised Guidelines, PDs would continue to be the exclusive counterparts of Government in the auction of only Treasury bills, while the BMS would be responsible for the issuance of securities with tenors of 2 years and above through the book building process. These two types of auctions are occasionally supplemented with private placements targeted at specific groups of investors. All dealers (PDs and BMS) are required to comply with primary market requirements and responsibilities, conducts and obligations and notices as may be determined by Government.
Foreign Investment in Government Securities
To diversify the investor and instrument base, non-resident investors are allowed to participate in securities with maturities of 2 years and longer tenors while Treasury bills are restricted to resident domestic investors.
Publication of Government Debt Information
Section 71 and 72 of the Public Financial Management Act, 2016 (Act 921) mandates the Public Debt Office to provide accurate and timely information in respect of debt stock, through annual debt reports, quarterly debt statistical bulletins, monthly newsletters, and other information related to public debt and debt management activities, all of which is easily be accessed here on this website. Information relating to public debt policies and guidelines are also published on this website. All data, reports and documents relating to public debt in Ghana may be found on this website using the Search button or under the Publications section.