The World Bank has urged the Government of Ghana to shift its focus from expensive short-term domestic borrowing to more affordable concessional financing options, as a path to sustainable economic transformation.
At the launch of the World Bank’s 2025 Policy Notes: Transforming Ghana in a Generation, held in Accra on Wednesday, Robert Taliercio, the Bank’s Country Director for Ghana, Sierra Leone, and Liberia, emphasised the urgent need for smarter fiscal choices — starting with making full use of concessional loans from the International Development Association (IDA).
According to Mr. Taliercio, while Ghana has recently seen some relief in domestic borrowing costs — with Treasury-bill rates falling to 11.9% in September 2025 — they remain significantly higher than IDA terms, which offer fixed interest rates as low as 1.5%, alongside generous repayment timelines and grace periods.
“The difference is stark,” Taliercio stated. “Between 2023 and 2024, Ghana paid an average of 27.4% on short-term domestic borrowing. In contrast, IDA blend loans carry interest and fees between 0.75% and 2.0%. Prioritising IDA funding is clearly the more prudent approach.”
Concessional Financing Key to Capital Investment
Taliercio warned that relying on high-interest domestic borrowing to fund infrastructure and other capital projects is not only unsustainable, but also drains resources that could be used for vital social services and long-term growth investments.
He urged Ghana to fully exhaust its IDA financing envelope before turning to domestic sources, particularly as concessional loans remain accessible and underutilised.
Tackling the Root of the Fiscal Crunch
The 2025 Policy Notes also diagnose deeper structural issues hampering Ghana’s economic resilience. Chief among them is low domestic revenue mobilisation. The report highlights that Ghana’s tax revenue, at just 13% of GDP in 2021, is far below its estimated potential of 21%, and trails the Sub-Saharan Africa average.
Though some progress has been made, with revenue hitting 7.1% of GDP in the first half of 2025 (just shy of the 7.3% target), the gap remains substantial.
The World Bank’s policy recommendations outline four core foundations for Ghana’s long-term transformation, with restoring macro-financial stability as a top priority. This includes comprehensive reforms in public finance, energy, and cocoa — sectors seen as both risks and opportunities in Ghana’s economic landscape.
A Call for Smarter Choices
As Ghana navigates its post-debt restructuring landscape, the World Bank’s message is clear: smart, concessional financing — not high-cost domestic borrowing — must lead the way.
“The path to inclusive, long-term development lies in lowering the cost of capital, raising more domestic revenue efficiently, and targeting investments that yield broad-based growth,” said Taliercio.
The Policy Notes are expected to guide Ghana’s policymaking over the next decade, as the country aims to transform its economy while safeguarding fiscal and social stability.
