Ghana’s Treasury Bill Rates Fall Below 20% for the First Time in 20 Months

Ghana’s Treasury bill rates have fallen below 20 percent for the first time in 20 months, reflecting a change in government borrowing strategies and improved investor confidence. The 91-day T-bill rate decreased to 17.72%, the 182-day to 18.97%, and the 364-day to 19.98%. This shift may aid businesses by reducing borrowing costs, despite warnings regarding the need for sustained economic stability.

Ghana’s Treasury bill (T-bill) rates have dipped below 20 percent for the first time in 20 months, marking a significant change in the government’s borrowing strategy and a boost in investor confidence regarding the country’s economic recovery. Recent data from the Bank of Ghana indicates that the 91-day T-bill rate fell to 17.72 percent, the 182-day bill dropped to 18.97 percent, and the 364-day bill decreased to 19.98 percent.

These recent rates have decreased significantly from the previous week’s figures: 20.79 percent for the 91-day bill, 22.99 percent for the 182-day bill, and 22.69 percent for the 364-day bill. The decline in T-bill rates suggests that the government is increasingly moving away from short-term domestic borrowing, focusing on fiscal consolidation, and exploring alternative funding avenues.

For instance, in January 2025, the government secured GH¢38.45 billion through T-bills, slightly less than the GH¢40.57 billion that investors offered. Authorities have been actively rejecting certain bids as a strategy to reduce yields and lower borrowing costs. Also notable is the decrease in total accepted bids, which fell from GH¢7.41 billion on February 28 to GH¢6.22 billion on March 7, highlighting efforts to limit excessive domestic borrowing.

In his State of the Nation Address, President John Dramani Mahama commented on the declining rates, linking them to enhanced investor trust in the government’s fiscal discipline and economic management. He stated, “The continuing decline in T-bill rates signals growing investor confidence in the country’s fiscal management.”

The reduction in interest rates presents several implications for businesses and the economy. Primarily, it is anticipated to lower borrowing costs for businesses and individuals, thereby easing access to credit. Additionally, it is expected to alleviate the government’s debt servicing burden, allowing for more resources to be allocated to development initiatives and spurring private sector growth as investors may redirect their interest towards more productive investments.

Nevertheless, analysts warn that while declining T-bill rates could be seen as a favorable development, maintaining economic stability and controlling inflation will be crucial to reaping sustained benefits. With Ghana remaining outside the international capital markets and facing challenges in the local bond market post-debt restructuring, Treasury bills will continue to serve as the primary means of financing the budget deficit.

In conclusion, Ghana’s Treasury bill rates have notably fallen below 20 percent for the first time in nearly two years, reflecting potential improvements in investor confidence and changes in government borrowing strategies. The decrease in rates is expected to lower borrowing costs, relieve government debt burdens, and promote private sector growth. However, continued economic stability and effective inflation control remain essential for the long-term benefits of these changes.

Original Source: www.graphic.com.gh