The Director of the African Department at the International Monetary Fund (IMF), Abebe Aemro Selassie, has cautioned governments against the growing excitement surrounding Eurobond issuances, warning that such enthusiasm can mask significant financial risks.
Speaking in an interview with Bernard Avle on Channel One TV’s The Point of View on Wednesday, January 21, Mr. Selassie acknowledged that while Eurobonds remain an attractive financing option, borrowing in local currency is often a safer and more responsible choice.
He explained that domestic borrowing allows governments to take on debt in their own currency, which can be more manageable if handled prudently, unlike Eurobonds that often attract excessive attention and hype.
Mr. Selassie noted that the IMF consistently conducts in-depth evaluations of countries’ economic policies and debt positions, including debt sustainability analyses, to identify potential risks. He pointed out that Ghana has been classified as being at high risk of debt distress since around 2014, a concern the Fund has highlighted for years.
He added that Ghana’s debt difficulties are not solely the result of domestic policy choices, but have also been influenced by changes in the global economic landscape.
Finally, he clarified that the IMF does not borrow on behalf of countries, stressing that decisions on borrowing and financing are made independently by sovereign governments.
