In Ghana’s financial market, interest rates on short-term instruments have increased for the third consecutive week, reflecting the current economic conditions. The yield on the 91-day T-bill rose by 0.05% to 19.79%, while the 182-day bill increased slightly to 22.47%, up from 22.24% the previous week.
However, the one-year (364-day) bill went down by 0.05% to 26.90%. This increase in interest rates is a concern for the government, which aims to reduce its interest costs substantially this year and in the coming years.
The government’s short-term instruments auction held on April 14, 2023, saw an oversubscription of 7.5%, with the government securing ¢1.79 billion from the sale, exceeding the target of ¢1.666 billion. Bids for the 91-day T-bill totaled ¢1.47 billion, while bids for the 182-day T-bill totaled ¢227 million. All bids were accepted, including those for the 364-day bill, which totaled ¢87.81 million.
The government is optimistic about the level of investor interest in short-term instruments, but it remains to be seen how this will affect the government’s borrowing costs. The high-interest rates could increase the government’s debt burden, making it more difficult to finance its operations.
As a result, the government is seeking ways to reduce its borrowing costs and promote economic growth. These efforts include implementing fiscal consolidation measures, such as reducing public expenditure and increasing revenue collection, as well as encouraging private sector investment in infrastructure and other key sectors.
Overall, the government’s short-term instruments auction results show that there is still investor confidence in the Ghanaian economy, despite the challenges it faces. This bodes well for the country’s economic recovery and long-term development goals.
Source: GhanaWeb