The government plans to introduce long term instruments to reduce the high interest rate payments on Treasury Bills.

Already, the government has initiated a program to restructure its debt by substituting the high cost short-term debt with longer-term instruments, which is expected to help reduce the high interest payments.

The Central Bank will in July this year issue a Eurobond worth up to US$1 billion to refinance debt and fund infrastructure projects in the country.

The government earlier expressed its intention to extend the maturity profile of public debt by diversifying the country’s sources of funding for major infrastructure projects and for other specified purposes including tapping the global bond market.

According to Mr. Tekper, the use of the proceeds of the bonds will be for the payment of counterpart funds for capital projects; capital expenditures approved in the 2013 budget (with priority given to self-financing projects), and refinancing of public debts to reduce the cost of borrowing.

The Central Bank is very optimistic that the bonds would be heavily oversubscribed.

President of the Ghana Bankers Association (GAB), Asare Akuffo, earlier this year, told Economy Times that Interest rates in the country could be reduced in the medium to long term if government reviews its level of borrowing from the money market.

He explained to Economy Times that government should reduce its level of borrowing from the money market, which is the only way interest rates could be slashed down.

Government always borrows from the money market through the issuance of treasury notes at a particular coupon rate to finance its domestic deficit.

However government’s debt management strategy by government depicts that non-concessional borrowing will be restricted to mainly economically viable and self-financing projects on a competitive basis, and explore hedge options to improve predictability of debt service of variable rated loans.

In addition to this, there will be liability-sharing financing measures that will involve the issuance of guarantees and on-lending to self-financing SOEs, and JV/SPV projects; and secure loan financing for only planned projects drawn from the reservoir of projects compiled in the Public Investment Programme (PIP) and GSGDA.

Government’s strategy for domestic financing will aim at maintaining a well-functioning domestic debt market in conjunction with external financing options. To achieve this, government plans to pursue moderating the growth of domestic debt; lengthening the maturity profile of domestic debt to reduce the frequent refinancing risk; broadening the range of instruments offered in the domestic market, including options of targeting instruments to ensure transparency and development of a benchmark yield curve and extending the yield curve by issuing 7-year, or 10-year fixed rate bonds, aimed at reducing liquidity in shorter dated instruments.