The 2025 Mid-Year Budget Review, presented by Finance Minister Dr. Cassiel Ato Forson on July 24, 2025, outlines a strategic plan to reset Ghana’s economy through fiscal discipline and sustainable growth. The capital market is integral to this agenda, serving as a mechanism to mobilize resources, reduce borrowing costs, and promote economic stability. This article examines the capital market’s role in supporting Ghana’s economic reset, details key initiatives from the budget review, and provides recommendations to enhance its effectiveness, with a focus on sustainable investments for Ghanaians.
The Capital Market’s Role in Ghana’s Economic Reset
The capital market facilitates long-term financing by connecting investors with businesses and government entities through bonds and equities. In Ghana, it supports economic growth by funding small and medium enterprises (SMEs), enabling infrastructure projects, and providing investment opportunities for investors. The 2025 Mid-Year Budget Review highlights a recovering economy, with 5.3% GDP growth in Q1 2025, a 42.6% Cedi appreciation against the US Dollar, and a credit rating upgrade to ‘B-’. The capital market is positioned to advance this progress by reducing reliance on external borrowing and fostering investor confidence, aligning with the budget’s theme, “Resetting the Economy for the Ghana We Want.”
Government Initiatives to Strengthen the Capital Market
The budget review outlines measures to bolster the capital market, supporting the government’s economic reset:
• Reopening the Domestic Bond Market: From August 2025, the government will finance the budget deficit through the domestic bond market, limiting treasury bills to cash management. Appointing bookrunners to ensure competitive pricing and broader distribution aims to lower borrowing costs. Declining treasury bill rates have saved GH¢4.9 billion in interest payments by June 2025.
• Debt Management Strategy: A liability management program includes bond buybacks and longer-term securities issuance to stabilize the yield curve and reduce debt servicing costs, enhancing market liquidity and investor trust.
• Financial Sector Support: Issuing GH¢1.5 billion in marketable bonds to recapitalize the National Investment Bank (NIB) has improved its Capital Adequacy Ratio to 23%, strengthening the financial sector’s capacity to support capital market activities.
• Sinking Fund Activation: Cedi and US Dollar Sinking Fund Accounts have been established to meet debt obligations due between 2026 and 2028, ensuring predictable debt servicing and reinforcing investor confidence.
• Debt Restructuring Progress: Timely payments to bondholders (US$700 million to Eurobond holders and GH¢9.8 billion to domestic bondholders) and advancements in external debt restructuring under the IMF program have reduced public debt by GH¢113.7 billion, lowering the debt-to-GDP ratio to 43.8%, enhancing Ghana’s creditworthiness.
These initiatives demonstrate the government’s commitment to leveraging the capital market to achieve fiscal sustainability and economic resilience.
Economic Impacts of Government Initiatives
The capital market strategies yield measurable outcomes:
• Lower Borrowing Costs: Competitive bond issuances and reduced treasury bill rates (e.g., 91-day rate from 27.73% to 14.73%) free up resources for investments in health, education, and infrastructure.
• Increased Investor Confidence: Debt restructuring, timely payments, and a stable Cedi, coupled with a credit rating upgrade, attract capital to the market.
• Financial Sector Stability: NIB’s recapitalization strengthens has strengthened the banks balance sheet to facilitate investments, supporting market liquidity.
• Support for Growth Initiatives: Capital market financing enables programs like the 24-Hour Economy and Big Push infrastructure projects, driving job creation and economic expansion.
Recommendations to Enhance the Capital Market
To maximize the capital market’s contribution to Ghana’s economic reset, the following measures are proposed:
1. Increase Financial Literacy: The Securities and Exchange Commission (SEC) and Ghana Stock Exchange (GSE) should expand financial education programs to boost retail investor participation, promoting inclusive growth.
2. Encourage Corporate Bond Issuance: Tax incentives and simplified regulations can spur private sector bond issuances, diversifying the market and supporting SME growth.
3. Upgrade Market Infrastructure: Modernizing the GSE’s trading and settlement systems will enhance efficiency and transparency, aligning with global standards to attract institutional investors.
4. Promote Green Bonds: Issuing green bonds to finance solar energy projects can enable Ghanaians to invest in affordable solar power solutions for households and businesses, reducing reliance on the Electricity Company of Ghana (ECG). This can lower energy costs, improve energy access, and align with global ESG investment trends, enhancing Ghana’s appeal to international investors.
5. Foster Regional Integration: Collaborating with ECOWAS to develop a regional bond market can increase liquidity and position Ghana as a financial hub in West Africa.
6. Strengthen Regulation: Enhancing the SEC’s oversight will ensure investor protection and market integrity, supporting sustained growth.
Performance of the Ghana Stock Exchange
In the second quarter of 2025, the Ghana Stock Exchange showed strong market activity, with SIC leading the performance chart at a remarkable 322% gain, followed by ACCESS (162%), ETI (174%), and CLYD (167%). Overall market indicators also reflected sustained growth, as shown by the steady rise in both the GSE Composite Index (GSE-CI) and the GSE Financial Stock Index (GSE-FSI). From January to June 2025, GSE-FSI outperformed GSE-CI, reaching a peak of 41.80% in June compared to GSE-CI’s 27.82%.
The data highlights increased investor confidence and notable gains in both general and financial stocks during the period. To sustain this positive trend, the government should prioritize continued fiscal discipline to maintain a stable macroeconomic environment, enhance investor confidence through timely debt restructuring payments, and support the GSE by providing tax incentives for new listings and improving market infrastructure, such as upgrading trading systems to attract both domestic and foreign investors.
Conclusion
The 2025 Mid-Year Budget Review positions the capital market as a key driver of Ghana’s economic reset, supporting fiscal discipline and sustainable growth. By reopening the bond market, optimizing debt management, and strengthening financial institutions, the government is creating a robust platform for economic progress. Green bonds for solar energy investments offer Ghanaians a path to energy independence, reducing reliance on ECG while aligning with global sustainability trends. Implementing the recommended measures will further enhance the capital market’s effectiveness, ensuring it supports the economic transformation envisioned for Ghana.
About the Writer
Kofi Busia Kyei is a seasoned finance professional with over a decade of experience in investment management, wealth management, and stockbroking. With proven expertise in pension fund oversight, portfolio optimization, and strategic leadership, he excels in leveraging advanced technologies, including Artificial Intelligence, to deliver innovative financial solutions. Visit younginvestorcalculator.com to access his investment tools. He is currently into Pensions Funds Management at Merban Capital LTD.
