Two years after a devastating economic crisis forced it into default, Ghana’s economy is expanding once more, but the effects of a local debt restructuring are threatening its longer-term recovery.

The local bond market was so severely damaged by the reorganisation, which was unprecedented on the African continent, that the government was compelled to rely increasingly on short-term, more expensive Treasury bills and private placements.

Investors are concerned about the reliance on relatively costly short-term finance. Additionally, six experts and investors told Reuters that the sustainability of government debt is further raised by private placements, whose pricing is sometimes opaque.

According to the individuals, the government may have trouble attracting purchasers when it attempts to access local markets for longer-term borrowings the following year.

“There’s little appetite whatsoever to gamble in (government debt) no matter how high or compensatory the rates are,” said Daniel Ankomah, Chief Investment Officer with Accra-based SAS Investment Management.

“It’s a market confidence thing and it’ll take a while alongside the economic recovery. To come back to where we were, we may need a decade or more.”

A further concern is the elections scheduled for December 7, which will choose Ghana’s next president. Investors are suspicious of the leading candidate’s spending pledges and are concerned about the government’s propensity to spend heavily to entice votes.

Despite the agony, Ghana’s finance minister claimed that the bond restructuring had made the debt sustainable again.

“We anticipate re-entering the domestic bond market in 2025, following a two-year hiatus,” it said in written response to Reuters

It further stated that the timetable was normal and that “an improved macroeconomic environment, specifically inflation,” was probably helping.

The IMF also stated that the temporary reliance on T-bills was anticipated and that continued fiscal tightening would reduce funding needs. The IMF’s debt sustainability evaluations calculate the amount of assistance required to get nations back on track.

“These developments are anticipated to enhance confidence in government securities and facilitate a gradual extension of their maturity profile over time,” it said in a statement.

Since domestic pension funds, banks, and people depend on them for funding when outside markets are too costly, governments that restructure debt usually protect them from losses. However, Ghana’s massive national debt prevented such a strategy.

To discuss ambitious plans to pay off debt arrears and restructure $12.7 billion in foreign debt, Zimbabwe’s president will hold a session of creditors and financial executives on Monday. The ultimate goal is to access global finance markets for the first time in almost twenty years.

It will be difficult for Zimbabwe, which has had various financial crises in recent decades, from recurrent episodes of hyperinflation to successive failed efforts to introduce new currency regimes, to pay down its debt load, representing 81% of its gross domestic product.

“The issue of arrears is a major albatross around our neck,” said Prosper Chitambara, a Harare-based independent economist.

It will be a long journey; at the moment, Zimbabwe cannot access even funds from the International Monetary Fund, which is the world’s lender of last resort. However, experts advise it’s crucial to pay off arrears.

“Once the arrears are cleared it will be cheaper to borrow and easier to attract investment,” Chitambara said.

Along with officials from the business sector, development organisations, and creditors, Zimbabwe’s president Emmerson Mnangagwa and Akinwumi Adesina, head of the African Development Bank (AfDB), will attend the one-day conference in Harare.

Funding for Zimbabwe, formerly a regional breadbasket that now struggles to feed its people, can only be unlocked by getting on track with bilateral creditors and settling arrears with the AfDB, World Bank, and European Investment Bank.

“The IMF is currently precluded from providing financial support to Zimbabwe” due to an unsustainable debt situation and external arrears, an IMF spokesperson said.

Zimbabwe’s initial goal is to become an IMF Staff-Monitored Program (SMP), which does not require executive board approval or financial assistance.

An SMP would help Zimbabwe re-establish sound economic policy, according to government officials. But the government has already missed two deadlines: last month and April when it was supposed to have an SMP in place.