Ghana’s Treasury Bill Rates Fall Below 20%: Implications for the Economy
Ghana’s Treasury bill rates have dropped below 20% for the first time in nearly two years, reflecting a positive shift in the government’s borrowing approach and strengthening investor confidence. Rates for 91-day, 182-day, and 364-day bills fell significantly. This trend is expected to reduce borrowing costs and support economic growth, though challenges remain in sustaining long-term economic stability.
Ghana’s Treasury bill (T-bill) rates have declined below 20% for the first instance in 20 months, indicating an evolution in the government’s borrowing strategy and an enhancement of investor confidence regarding economic recovery. The Bank of Ghana’s latest auction results reveal a significant reduction: the 91-day T-bill rate is now at 17.72%, the 182-day bill at 18.97%, and the 364-day bill at 19.98%. These figures are notably lower than the previous week’s rates of 20.79%, 22.99%, and 22.69% respectively.
This trend suggests a diminishing dependence on short-term domestic borrowing as the government pursues fiscal consolidation and seeks alternative funding avenues. In January 2025, the government raised GH¢38.45 billion via T-bills, slightly under the GH¢40.57 billion offered by investors. Despite a strong demand, authorities have been selective in accepting bids to drive yields down, a strategy that aligns with efforts to reduce borrowing costs.
Additional data indicates a drop in total accepted bids, from GH¢7.41 billion on February 28 to GH¢6.22 billion on March 7, underscoring the government’s intent to limit excessive domestic borrowing. President John Dramani Mahama highlighted the significance of this trend in his State of the Nation Address, attributing it to increased investor confidence in the government’s fiscal discipline. He remarked, “The continuing decline in T-bill rates signals growing investor confidence in the country’s fiscal management.”
The ongoing decrease in T-bill rates is anticipated to reduce borrowing costs for both businesses and individuals, thereby facilitating easier access to credit. Furthermore, it is expected to alleviate the government’s debt servicing burden, releasing funds for developmental initiatives. This trend could also stimulate private sector growth as investors turn their attention to more productive investments instead of risk-free government securities. Nevertheless, analysts emphasize the importance of stable economic conditions and inflation management to ensure these advantages can be realized long-term. Given the continued exclusion of Ghana from the international capital market and the local bond market’s struggles following debt restructuring, Treasury bills remain pivotal for addressing the budget deficit.
In conclusion, Ghana’s T-bill rates have fallen below 20% for the first time in 20 months, indicating a strategic shift in government borrowing and improved investor confidence. This decline in rates is expected to lower borrowing costs, reduce government debt burdens, and encourage private sector growth. However, maintaining economic stability and controlling inflation will be essential to securing long-term benefits for the economy.
Original Source: www.graphic.com.gh
