Ghana’s Treasury bill rates have declined below 20% for the first time in 20 months, reflecting improved investor confidence and a strategic overhaul in government borrowing. The 91-day T-bill is at 17.72%, with corresponding decreases in other T-bill durations. This shift aims to reduce reliance on domestic borrowing and borrowing costs while supporting overall economic recovery.
Ghana’s Treasury bill (T-bill) rates have dipped below 20% for the first time in nearly two years, indicating a strategic change in government borrowing and increased investor confidence in the nation’s economic recovery. Recent auction results from the Bank of Ghana reveal that the 91-day T-bill rate has fallen to 17.72%, the 182-day rate to 18.97%, and the 364-day rate to 19.98%. These changes reflect a significant reduction from previous rates of 20.79%, 22.99%, and 22.69% respectively.
The decline in T-bill rates suggests the government is shifting from a reliance on short-term domestic borrowing to pursue fiscal consolidation and seek alternative funding sources. For instance, in January 2025, the government secured GH¢38.45 billion through T-bills, slightly below the GH¢40.57 billion offered by investors. Despite high demand, the government has tended to reject bids to lower yields, reflecting an intent to diminish borrowing costs.
Auction results also indicate a decline in total bids accepted, which dropped from GH¢7.41 billion on February 28 to GH¢6.22 billion on March 7, showcasing a commitment to decreasing excessive domestic borrowing. In his State of the Nation Address, President John Dramani Mahama emphasized that the falling T-bill rates are indicative of enhanced investor confidence in the government’s fiscal discipline and management.
The ongoing decrease in interest rates is anticipated to benefit the economy by making borrowing less costly for both businesses and individuals, thereby facilitating easier access to credit. Furthermore, a reduced debt servicing burden for the government could allow for greater allocation of resources towards development projects. It may also inspire private sector growth as investors direct funds towards more productive investments rather than risk-free government securities.
However, analysts express caution, noting that while these lower T-bill rates represent a positive shift, maintaining economic stability and controlling inflation will be vital in ensuring sustainable long-term benefits. Given that Ghana remains excluded from the international capital market and faces challenges in its local bond market following debt restructuring, T-bills continue to be a primary financing mechanism for addressing the budget deficit.
The recent drop in Ghana’s Treasury bill rates below 20% marks a significant milestone, reflecting changes in government borrowing practices and bolstered investor confidence. As rates decline, access to credit for businesses and individuals may improve, fostering economic growth. Nonetheless, analysts warn that for such trends to yield lasting benefits, stable economic practices and effective inflation control remain essential.
Original Source: www.graphic.com.gh
