Ghana’s Treasury bill (T-bill) rates have fallen below 20 per cent for the first time in nearly two years, reflecting a shift in government borrowing strategy and strengthening investor confidence in the country’s economic recovery.

According to the latest auction results from the Bank of Ghana, the 91-day T-bill rate dropped sharply to 17.72 per cent, while the 182-day bill fell to 18.97 per cent, and the 364-day bill declined to 19.98 per cent.?

These figures represent a dip from the previous week’s rates of 20.79 per cent (91-day), 22.99 per cent (182-day), and 22.69 per cent (364-day).

The declining T-bill rates suggest a reduced reliance on short-term domestic borrowing, as the government moves towards fiscal consolidation and explores alternative funding sources.

For instance, in January 2025, the government raised GH¢38.45 billion through T-bills, slightly below the GH¢40.57 billion offered by investors. Despite high demand, authorities have been rejecting bids aggressively to push yields lower, aligning with the goal of reducing borrowing costs?.

The latest auction results also show a decrease in total bids accepted, from 8GH¢7.41 billion on February 28 to GH¢6.22 billion on March 7, further demonstrating a shift towards curbing excessive domestic borrowing?.

Speaking on the falling rates, President John Dramani Mahama, in his State of the Nation Address, attributed the trend to growing investor confidence in the government’s fiscal discipline and economic management.

"The continuing decline in T-bill rates signals growing investor confidence in the country's fiscal management," he stated.

Implications for Businesses and the Economy

The steady decline in interest rates is expected to:

• Lower the cost of borrowing for businesses and individuals, making access to credit easier and cheaper.
• Reduce government’s debt servicing burden, freeing up resources for development projects.
• Encourage private sector growth, as investors shift focus from risk-free government securities to productive investments.

However, analysts caution that while lower T-bill rates are a positive sign, sustained economic stability and inflation control will be critical to ensuring long-term gains.

With Ghana still locked out of the international capital market and the local bond market struggling post-debt restructuring, Treasury bills remain the primary tool for financing the budget deficit.