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

The World Bank has advised the Government of Ghana to prioritize low-interest concessional financing over expensive domestic borrowing to fund capital projects.

Robert Taliercio, the World Bank Country Director for Ghana, Sierra Leone, and Liberia, made the recommendation at the launch of the 2025 Policy Notes: Transforming Ghana in a Generation in Accra on September 24, 2025. He highlighted that concessional loans from institutions such as the International Development Association (IDA) offer far more attractive terms compared to short-term domestic instruments like Treasury bills.

Between 2023 and 2024, Ghana’s domestic T-bills carried an average interest rate of 27.4 percent, while IDA loans typically charge between 0.75 and 2.0 percent with long grace periods. Even after a recent drop in domestic borrowing costs to 11.9 percent in September 2025, IDA blend terms remain significantly cheaper at around 1.5 percent with longer repayment horizons. “It’s an obvious choice to maximize all IDA resources before turning to domestic financing,” Mr. Taliercio emphasized.

The World Bank’s 2025 Policy Notes outline key strategies for Ghana’s economic transformation, starting with restoring macroeconomic stability. This includes boosting domestic revenue, ensuring fiscal sustainability, and reforming critical sectors such as energy and cocoa.

Despite some progress, Ghana’s tax-to-GDP ratio remains low at 13 percent as of 2021—well below its estimated potential of 21 percent and below the Sub-Saharan African average. In the first half of 2025, government revenue reached 7.1 percent of GDP, slightly below the 7.3 percent target.