Ghana’s Treasury bill rates fell below 20% for the first time in 20 months, with current rates at 17.72% (91-day), 18.97% (182-day), and 19.98% (364-day). This shift reflects the government’s borrowing strategy change, reducing reliance on domestic debt. President Mahama highlighted increased investor confidence, while analysts caution about the need for sustained economic stability.
In a significant development, Ghana’s Treasury bill (T-bill) rates have fallen below 20 percent for the first time in 20 months, signifying a pivotal change in the government’s approach to borrowing and enhancing investor confidence in economic recovery. According to the recent auction outcome from the Bank of Ghana, the 91-day T-bill rate decreased to 17.72 percent, the 182-day bill to 18.97 percent, and the 364-day bill to 19.98 percent.
These new rates mark a decline from the previous week, which recorded rates of 20.79 percent (91-day), 22.99 percent (182-day), and 22.69 percent (364-day). This trend reflects a reduced dependence on short-term domestic borrowing as the government focuses on fiscal consolidation and alternative funding sources. In January 2025, for instance, the government secured GH¢38.45 billion through T-bills, which was slightly under the GH¢40.57 billion investors offered.
Despite the strong demand for T-bills, government authorities have been active in rejecting bids to lower yields, promoting the objective of diminishing borrowing costs. Moreover, the total bids accepted dropped from GH¢7.41 billion on February 28 to GH¢6.22 billion on March 7, indicating a determined effort to control excessive domestic borrowing.
President John Dramani Mahama remarked during his State of the Nation Address that the reduction in T-bill rates points to the increasing confidence investors have in the government’s fiscal management. “The continuing decline in T-bill rates signals growing investor confidence in the country’s fiscal management,” he stated.
The ongoing decrease in interest rates is projected to facilitate lower borrowing costs for businesses and individuals, improve access to credit, and alleviate the government’s debt servicing obligations while reserving resources for developmental initiatives. Additionally, this trend may stimulate private sector growth as investors consider shifting from risk-averse government securities to more productive investments.
However, experts advise caution as sustained economic stability and effective inflation control remain essential for achieving long-term benefits. Despite being excluded from the international capital market, and facing challenges in the local bond market post-debt restructuring, Treasury bills continue to be the main financial tool for covering the budget deficit.
The recent decline in Ghana’s Treasury bill rates below 20 percent, a first in nearly two years, highlights a transformative shift in government borrowing strategies and growing investor confidence. While this development is poised to lower borrowing costs and liberate resources for development, vigilance in economic stability and inflation management will be crucial for long-lasting positive effects.
Original Source: www.graphic.com.gh
