Ghana's Fiscal Turnaround: A Eurobond Investment Opportunity Amid Stabilizing Markets

Ghana's journey from fiscal distress to cautious optimism has captured the attention of emerging market (EM) investors. After years of debt crises and economic volatility, the West African nation has embarked on a disciplined path of fiscal consolidation, supported by structural reforms, international partnerships, and a recalibrated debt strategy. For investors, the question now is whether Ghana's Eurobond market offers a compelling value proposition in this evolving landscape.

Fiscal Consolidation: A New Era of Discipline

Ghana's 2025 fiscal deficit target has been revised downward to 3.8% of GDP, down from 4.1% in March, reflecting a marked improvement in fiscal management. The first half of the year delivered a deficit of just 1.1% of GDP, well below the 2.4% target, driven by a 14% underspend on public expenditure. While revenue and grants fell short by 3%, the government's ability to curb spending has been critical. This fiscal restraint has allowed Ghana to reduce its debt-to-GDP ratio to 66.0% in 2025 from 70.2% in 2024, a decline bolstered by the IMF's $3 billion Extended Credit Facility (ECF) and the G20 Common Framework's debt restructuring.

The success of these measures is evident in investor sentiment. Fitch Ratings upgraded Ghana's credit outlook to “stable” in 2025, while the Bank of Ghana's tight monetary policy—keeping the Monetary Policy Rate at 28.0%—has driven inflation down to 18.4%, the lowest in over three years. The Ghanaian cedi's 17% appreciation against the U.S. dollar since April 2025 further signals stabilizing macroeconomic conditions.

Eurobond Restructuring: A Path to Sustainable Debt

At the heart of Ghana's fiscal turnaround is its ambitious Eurobond restructuring. The government's Disco Option offers bondholders a 37% haircut on principal and past due interest (PDI), with a two-tenor structure: a 5.0% coupon until 2028, followed by a 6.0% coupon until maturities in 2029 and 2035. The Par Option, meanwhile, provides a 1.5% coupon with maturities shortened to 2037, alongside a new “Down Payment Bond” offering a 4% zero-coupon structure maturing in 2026. These terms, while more conservative than initial proposals, align with IMF program requirements and signal a commitment to fiscal sustainability.

The restructuring has already yielded tangible results. A $300 million payment to Eurobond holders in July 2025—part of a broader $3 billion Eurobond exchange—has restored confidence. Ghana's external reserves, now at $37.37 billion, provide a buffer against external shocks, while the elimination of external arrears has improved access to international capital markets.

Investor Confidence in a Volatile Global Environment

Ghana's progress has not gone unnoticed. Despite global headwinds, including U.S.-China trade tensions and Middle East conflicts, the country's Eurobond yields have tightened, reflecting improved risk perceptions. The broader EM bond market also benefited in Q2 2025, with local and hard currency bonds posting positive returns. Ghana's disciplined approach to fiscal management and its alignment with IMF programs have positioned it as a relative outperformer in a challenging EM environment.

However, risks remain. Customs revenue shortfalls, smuggling of marine gas oil, and rising wage pressures could test fiscal discipline. Additionally, the zero-coupon structure of the Down Payment Bond may limit liquidity for some investors.

A Calculated Investment Case

For investors, Ghana's Eurobond presents a high-risk, high-reward proposition. The government's ability to meet debt obligations, as evidenced by the July 2025 payment, and the structural reforms underpinning the ECF program, suggest a credible path to recovery. The restructured terms, while offering lower yields than pre-crisis levels, provide a more sustainable debt profile.

Investors should monitor the Official Creditor Committee's confirmation of comparability of treatment for bondholders, a key step in finalizing the restructuring. Additionally, tracking inflation trends and the cedi's stability will be critical. For those with a long-term horizon and risk tolerance, Ghana's Eurobond could serve as a strategic addition to an EM portfolio, particularly in a dollar-weak environment.

In conclusion, Ghana's fiscal consolidation and improved debt metrics have laid the groundwork for renewed investor confidence. While challenges persist, the country's commitment to reform and its alignment with international standards make its Eurobond market an intriguing, albeit cautious, opportunity in the EM space.