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 the hype often overshadows the significant risks involved.
Speaking in an interview on The Point of View on Channel One TV on Wednesday, January 21, Mr Selassie acknowledged that Eurobonds remain a common financing option for many countries. However, he stressed that borrowing domestically, in local currency, is generally a safer and more manageable alternative when handled prudently.
According to him, domestic bonds allow governments to raise funds in their own currency, reducing exposure to foreign exchange risks—an advantage Eurobonds do not offer.
“I sometimes worry about the hype and spectacle that accompany Eurobond issuances,” Mr Selassie said. “When governments issue domestic bonds, there are sound economic reasons for doing so because borrowing in one’s own currency is usually manageable if handled carefully. Yet every Eurobond issue tends to generate a lot of excitement.”
Mr Selassie explained that the IMF routinely conducts in-depth assessments of countries’ economic policies and financing strategies, including debt sustainability analyses, to identify potential vulnerabilities.
He revealed that Ghana has been classified as being at high risk of debt distress since around 2014, noting that the Fund has consistently flagged these concerns over the years.
“Ghana has been categorised as having a high risk of debt distress going back to about 2014, and we have been flagging these vulnerabilities since then,” he stated.
The IMF official clarified that Ghana’s current debt challenges cannot be attributed solely to domestic policy decisions, pointing out that shifts in global economic conditions have also played a significant role.
He further dismissed claims that the IMF borrows on behalf of countries, emphasising that all borrowing decisions are made independently by sovereign governments.
“There is no basis for the claim that the IMF goes out to borrow on behalf of countries,” Mr Selassie said. “If anything, we have often argued the opposite. Ultimately, these are sovereign decisions taken by national authorities.”
