Government is set to issue its first three-year bond this week, to raise about half a billion Ghana cedis using the book building route.

This will bring to three the total number of bonds issued so far this year, with the previous two being five-year bonds which together raised a billion cedis to refinance debts.

Though the Finance Ministry is yet to determine the amount it seeks, information provided by the central bank earlier this month indicates that government will need about US$500million to settle maturing debts and support the budget.

So far, government has raised about GH¢10.62 billion cedis through various debt securities; and going by the Bank of Ghana’s notice served of government’s plan, the total value of issued securities this year will reach GH¢15.5 billion by end of the month.

It is expected that issuance of the three year bond will be oversubscribed, with the previous two bonds issued being oversubscribed as the bonds offer relatively high returns to investors.

However, the borrowing costs continue to remain a concern to economic policy analysts.

According to the Bank of Ghana, Ghana’s debt currently stands at US$25.6billion as at December last year, and it’s seen by rating agency Fitch -- which recently maintained Ghana’s credit ratings at B with negative outlook -- as a worrying situation.

While the former first Deputy-Governor of the Bank of Ghana, Dr. Mahamudu Bawumia -- now presidential running-mate of the biggest opposition party, has consistently raised concerns about the debt position of the country, the Finance Minister Seth Terkper insists government is undertaking what he calls ‘smart’ borrowing whereby the projects mainly pay for themselves.

Anxiety about the country’s debt levels have heightened as economic growth has slowed, and it is forecasted by the IMF to expand by 3.5 percent this year following the slump in commodities prices and global economic meltdown.

As the country goes to the polls this year, it is feared government will overspend and widen the country’s deficit position.

“Public debt will peak this year,” Fitch said in a statement released earlier this month.

The concerns of ballooning debt, despite assurances from the President that government will spend within its budget limit, stem from the fact that every election year over the years has seen a splurge of spending from the party in power.

The deficit peaked twice in the election years 2008 and 2012, ballooning to 8.5 percent and 11.8 percent of GDP respectively.

The fallout of this deficit surge in election years is that interest or debt-service costs have increased sharply soon after.