Interest Rates Drop in Ghana to Record Low in 2023

Ghana has witnessed the sharpest drop in interest rates on the continent since the beginning of the year. Interest rates have plummeted by a significant 15.1%, representing a significant decline from the high of 35% at the beginning of the year. This drop-in rates is expected to reduce the cost of borrowing in the country.

Despite the decline, Ghana’s interest rates are still among the highest on the continent, with Egypt being one of the few countries in Africa with higher rates. Analysts, however, remain optimistic that the recent approval of $710 million in loans by Parliament will slow down the rise in yields on the money market.

The seven approved loans are expected to support critical sectors of the economy and facilitate the government’s bid to secure an IMF board agreement. The government has expressed confidence in the loans, which are expected to finance various government initiatives.

At the last auction on May 5, 2023, the T-bills sale was oversubscribed, indicating investor confidence in the country’s economic prospects. The treasury raised ¢2.57 billion, exceeding the gross target by 40.01%.

The auction by the Bank of Ghana saw the government accepting a significant ¢2.56 billion from the bids submitted by investors, largely the banks. The majority of the bids came from the 91-day T-bills, as ¢1.62 billion were tendered, with all bids accepted.

The decline in interest rates is expected to benefit both borrowers and the economy at large. Lower rates will lead to increased borrowing, thereby stimulating economic growth. For the most part, analysts are optimistic that Ghana’s economy will continue to experience growth, boosted by the recent loans approved by Parliament.

In a nutshell, Ghana’s sharp decline in interest rates represents a significant development for the country’s economy. With the approval of the $710 million loans and the oversubscription of the T-bills sale, it is clear that investors remain confident in Ghana’s economic prospects. The decline in rates is expected to reduce the cost of borrowing and stimulate economic growth, thereby benefiting both borrowers and the economy at large.