Ghana's Treasury bill (T-bill) yields fell below 20 percent for the first time in nearly two years after a policy change by the government and increased investor optimism in the economic recovery of the nation. The 91-day T-bill rate fell to 17.72 percent, the 182-day bill to 18.97 percent, and the 364-day bill to 19.98 percent, the Bank of Ghana's recent auction yields showed. These are decreases from last week's 20.79 percent (91-day), 22.99 percent (182-day), and 22.69 percent (364-day).
The falling T-bill yields indicate lower use of short-term domestic borrowing, as the government is shifting towards fiscal consolidation and looking for alternative sources of financing.
Recently, for instance, in January 2025, the authorities borrowed GH¢38.45 billion from T-bills, which is below the amount of GH¢40.57 billion on the table from investors. Despite having very good demand, the authorities have been aggressively closing bids as a way of pushing the yields crashing in accordance with the policy of reducing the cost of borrowing. The latest auction outcomes also reflect a slowdown in the number of bids accepted, from GH¢7.41 billion on February 28 to GH¢6.22 billion on March 7, again reflecting a shift toward reining in excess domestic borrowing.
On falling rates, President John Dramani Mahama, addressing the nation in his State of the Nation Address, explained the trend was on account of increasing investor confidence in the government's fiscal discipline and management of the economy. The steady decline in T-bill rates is an indication of the growing confidence of investors in the country's management of affairs," he added further.
The steady decline in interest rates will have the tendency to reduce the cost of borrowing for companies and individuals; thus, credit will be affordable and within reach.
Reduce the government's burden to repay the loan, which will open up the way for the financing of developmental schemes. Private sector growth will gain momentum, with investors moving away from safe government papers to productive investment. Experts caution, however, that while the declining T-bill yields are a relief, sustained economic stability and inflation control would be the magic formula for unlocking long-term gains.
Treasury bills are still the central source of raising the budget deficit financing as Ghana continues to be shunned by the international capital market while its domestic bond market is closed down due to rescheduling of debts.
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