World Bank Urges Ghana to Favour Concessional Loans Over Costly Domestic Borrowing

The World Bank has advised Ghana’s government to prioritise concessional loans from international lenders over high-interest domestic borrowing to finance its development projects. According to Robert Taliercio, the Bank’s Country Director for Ghana, Sierra Leone, and Liberia, institutions such as the International Development Association (IDA) offer far more favourable terms than Ghana’s short-term Treasury bills.

Speaking in Accra at the launch of the World Bank’s 2025 Policy Notes: Transforming Ghana in a Generation on September 24, 2025, Taliercio highlighted the stark difference in borrowing costs. He explained that while Treasury-bill rates averaged 27.4 percent between 2023 and 2024, IDA loans typically attract interest and service fees between 0.75 percent and 2 percent, alongside longer repayment grace periods.

Even though Ghana’s average domestic borrowing costs have dropped to 11.9 percent as of September 2025, new IDA blend terms still offer significantly lower rates — about 1.5 percent locked in over longer periods. “It’s an obvious choice to use all available IDA financing before turning again to domestic markets,” Taliercio stressed.

The 2025 Policy Notes lay out Ghana’s structural challenges and propose four strategic foundations to achieve long-term, inclusive growth. The first pillar emphasises restoring macro-financial stability through stronger tax mobilisation, sustainable public finances, and reforms in key sectors such as energy and cocoa.

Ghana’s current tax mobilisation remains far below potential, standing at just 13 percent of GDP in 2021 against an estimated potential of 21 percent and the Sub-Saharan African average. In the first half of 2025, government revenue reached 7.1 percent of GDP, slightly under its 7.3 percent target, underscoring the urgency for reforms recommended in the World Bank’s policy blueprint.

source: citi newsroom