Ghana’s Treasury bill rates have fallen below 20 percent for the first time in 20 months, with a sharp decline in rates reflecting government strategy changes and increased investor confidence. The 91-day rate is now 17.72 percent, the 182-day rate is 18.97 percent, and the 364-day rate is 19.98 percent. This trend aims to reduce reliance on domestic borrowing and promote economic stability.
Ghana’s Treasury bill rates have notably decreased below 20 percent for the first time in 20 months, reflecting a change in the government’s borrowing strategy and a resurgence of investor confidence in the nation’s economic recovery. Recent auction results from the Bank of Ghana indicate that the 91-day T-bill rate has dropped to 17.72 percent, the 182-day bill has fallen to 18.97 percent, and the 364-day bill decreased to 19.98 percent.
These rates signify a notable decline from the previous week’s figures of 20.79 percent for the 91-day, 22.99 percent for the 182-day, and 22.69 percent for the 364-day bills. This downward trend indicates a reduction in the government’s dependence on short-term domestic borrowing as they pursue fiscal consolidation and seek alternative funding sources.
In January 2025, the government raised GH¢38.45 billion through T-bills, slightly below the GH¢40.57 billion offered by investors. Despite robust demand, the authorities have been selectively rejecting bids to lower yields, which aligns with their objective to reduce borrowing costs.
The latest auction results reveal a decrease in total bids accepted, from GH¢7.41 billion on February 28 to GH¢6.22 billion on March 7, further indicating a strategic move to mitigate excessive domestic borrowing.
President John Dramani Mahama, during his State of the Nation Address, recognized the significance of falling rates by attributing them to enhanced investor confidence in the government’s fiscal discipline and economic management, stating, “The continuing decline in T-bill rates signals growing investor confidence in the country’s fiscal management.”
The ongoing decline in interest rates is anticipated to lower borrowing costs for businesses and individuals, thereby facilitating easier and more affordable access to credit. Additionally, this trend is expected to alleviate the government’s debt servicing obligations, allowing more resources to be allocated for development projects.
Moreover, it is likely to foster private sector growth as investors may shift their focus from risk-free government securities to more productive investments. However, analysts emphasize that while these lower T-bill rates are encouraging, maintaining economic stability and controlling inflation are crucial for achieving sustainable long-term benefits, particularly as Ghana remains excluded from the international capital market and the local bond market struggles following debt restructuring, making Treasury bills the primary financing tool for the budget deficit.
In summary, Ghana’s Treasury bill rates have decreased below 20 percent, signaling a positive shift in government borrowing and investor confidence. The government’s strategy of curbing reliance on short-term domestic borrowing aims to enhance fiscal strength and economic growth. While the declining rates present opportunities for businesses and individuals, continued efforts towards economic stability and inflation control will be essential for sustained benefits.
Original Source: www.graphic.com.gh
