There’s growing concern among financial experts about Ghana’s plan to finance 63% of its 2025 budget deficit by borrowing money within the country.

This approach, combined with recent rejections and low interest in Treasury Bills, has raised alarms about whether the government can meet its financial goals and what this could mean for the country’s economy.

Finance expert Nelson Cudjoe Kuagbedzi has warned that the continuous rejections and low interest in Treasury Bill auctions could seriously harm the government’s ability to cover its budget shortfall.

He pointed out that this trend has “significant implications for Ghana’s economy.” If the government can’t raise enough money within the country, it could lead to “increased borrowing costs, economic instability, inflation, currency depreciation, and even a sovereign debt crisis,” he explained.

The problem of financing the country’s budget deficit is not new. Ghana has long struggled to generate enough revenue, mainly because it collects low taxes. Right now, Ghana’s tax revenue is only about 13.9% of its GDP, which makes it harder to meet the country’s financial needs.

(Table showing T-bills auction trends from March 7-April 4, 2025)

Nelson Cudjoe Kuagbedzi also acknowledged that borrowing to cover a budget deficit can be helpful to the economy if done carefully, as it can bring in needed funds and help stimulate growth. However, he also warned that “uncontrolled deficit financing can lead to inflationary pressures, widen income inequality, and create overall economic instability.”

The current situation, where Ghana is relying heavily on local borrowing and seems unwilling to accept higher borrowing costs, presents a tough challenge. It’s unclear how the government will handle these difficulties and maintain a stable economy for the future. To succeed, the government will need to find different ways to raise money to meet its financial obligations without causing more problems for the economy. How the government balances its fiscal plans, investor interest, and borrowing costs will be key to shaping the country’s economic path in the coming year.