The Economic Policy Advisor to the Vice President has described the reactivation of Ghana’s Sinking Fund as a critical step toward insulating the country from future debt shocks.
Dr. Sharif Mahmud Khalid, speaking on Joy News’ PM Express on Wednesday, June 17, argued that this move—alongside fiscal discipline and targeted reforms—contributed significantly to Ghana’s recent credit rating upgrade by Fitch Ratings.
Fitch upgraded Ghana’s Long-Term Foreign-Currency Issuer Default Rating (IDR) from ‘Restricted Default’ to ‘B-’ with a Stable Outlook, citing improved debt servicing prospects.
“If you’ve activated a Sinking Fund, which is an insurance measure to service most of these debts, and then you’ve committed to both external and domestic debt programs, invariably, it’s going to improve [your rating],” Dr. Khalid said.
He described the reactivation of the fund as a signal of commitment and financial responsibility.
“It’s not just about Fitch. It’s about what we’re doing internally. Reactivating the Sinking Fund tells the markets that we are serious about debt service. That’s insurance for our future.”
Dr. Khalid was clear that the recovery being observed is not accidental.
“The government’s commitment, initiative, and programme have brought us here. This didn’t come from luck. It came from decisions—some of them difficult ones.”
Responding to co-panellist Prof. Godfred Bokpin’s concerns about premature confidence, Dr. Khalid dismissed any notion of overconfidence on the government’s part.
“I wouldn’t say the government is getting bullish. What we’re doing is stabilising. That’s the priority. We’re tightening internal controls, reducing appointments, and managing spending. These are deliberate signals to the market.”
He also explained that market reactions are often based on perceptions shaped at the point of budget presentation.
“Once the budget is read, the market responds—whether you’ve spent a penny or not—because the market knows your allocations. So yes, spending matters, but perception drives market response too.”
Dr. Khalid tied Ghana’s economic recovery to the domestic debt exchange programme, which, he said, helped calm investor fears and reduce short-term risks.
“Prof [Bokpin] mentioned that we started to make some gains thanks to the domestic debt exchange programme. That’s true. That alone sent a signal to rating agencies. And now that we’ve made external commitments through the Paris Club and China, those too feed into the outlook.”
Despite the external credit upgrade, Dr. Khalid reaffirmed that the government is not rushing back into the foreign capital markets.
“We’re not ready to push externally yet. We’re still focused on stabilising the domestic market. Until we see more consistency and resilience at home, we’re holding off.”
While optimistic, Dr. Khalid was also cautious. He stressed that the rating upgrade should be seen as a vote of confidence in Ghana’s reforms—not a reason to relax.
“The last thing we want is to fall back. We’ve seen the bottom. We’ve taken the pain. Now we have to build. The reactivation of the Sinking Fund shows we’re planning ahead.”