Once shunned by investors following a historic debt default, Ghana’s dollar-denominated bonds are now delivering the highest returns in emerging markets for May, signalling renewed confidence in the nation’s economic recovery and fiscal management.
According to Bloomberg data, Ghana’s bonds have provided an impressive 8.7% total return this month, far surpassing the 0.4% average return for emerging markets in the same period. This remarkable performance underscores a dramatic turnaround for the West African gold and cocoa powerhouse.
Factors Driving Ghana’s Resurgence
Key economic indicators are fueling investor optimism. A surge in gold exports, consistent trade surpluses, and slowing inflation have significantly bolstered Ghana’s currency and debt market. This recovery comes after the nation defaulted on its external debt in 2022, prompting a $3 billion bailout from the International Monetary Fund (IMF).
President John Mahama, who took office after his victory in last year’s elections, has implemented bold fiscal reforms. His administration has prioritized cutting government expenditure and tackling inflation, which dropped to 21.2% in April 2025, a significant decline from its December 2022 peak of 54%.
“Simply put, Ghana is back,” said Kato Mukuru, head of research and CEO of Emerging and Frontier Capital. “Positive economic trends have driven a strong rally in the bond market.”
A Strengthening Cedi
The Ghanaian cedi, which is appreciated by an astounding 43% this year, is now the world’s second-best-performing currency, trailing only the Russian ruble. Analysts attribute this rally to improving macroeconomic fundamentals and effective government policies.
Samir Gadio, head of Africa strategy at Standard Chartered Plc, highlighted the cedi’s pivotal role in supporting Ghana’s bond performance. “The recent bond outperformance has been supported by an improved external position. The cedi rally has likely underpinned bonds, as this should help lower debt ratios,” he said.
Meeting Debt Reduction Goals Ahead of Schedule
Ghana’s fiscal discipline is paying off. The country is on track to reduce its debt-to-GDP ratio below the 55% target set by the IMF. According to Barclays Plc, this milestone may be achieved as early as this year—three years ahead of the IMF’s 2028 deadline.
This swift progress reinforces the narrative of Ghana’s economic rebound and positions the country as a rising star among emerging markets.
Investor Optimism
Ghana’s extraordinary bond performance in May reflects the broader investor confidence in the government’s economic management. With its abundant natural resources and a renewed commitment to fiscal discipline, the country appears well-poised to sustain its economic momentum.
The once-shunned bonds have now become a symbol of Ghana’s resurgence, offering a compelling case study in resilience and effective policy reforms.
Story by: Mercy Addai Turkson # ahotoronline.com
