By Alex Ababio
Ghana has recently achieved a significant financial milestone by saving approximately GH¢1 billion due to a notable reduction in Treasury bill (T-bill) rates.
This development was announced by the Minister of Finance, Cassiel Ato Forson, during the National Economic Dialogue held on March 3, 2025, under the theme “Resetting Ghana: Building the Economy We Want Together.”
The reduction in T-bill rates is a result of strong investor demand and the Treasury’s strategic decision to reject higher bids, leading to a shift in yield expectations. At the beginning of the year, T-bill rates ranged between 28% and 30%.
However, recent auction results from the Bank of Ghana indicate a significant decline, with rates now averaging between 20% and 22%. Specifically, the 91-day T-bill rate decreased from 28.34% to 20.79%, the 182-day T-bill rate fell from 28.96% to 22.98%, and the 364-day T-bill rate dropped from 30.17% to 22.69%.
This decline in borrowing costs is expected to free up resources that can be redirected toward critical sectors of the economy, such as infrastructure, education, and healthcare. By investing in these areas, the government aims to stimulate economic growth, create employment opportunities, and improve the overall quality of life for Ghanaians.
In addition to the reduction in T-bill rates, Ghana has made significant progress in managing its public debt. As of November 2024, the country’s total public debt stood at GH¢761.0 billion, equivalent to 72.2% of its Gross Domestic Product (GDP).
This represents a decrease of GH¢24.1 billion from the previous month, primarily attributed to external debt restructuring efforts. In dollar terms, the total debt was estimated at $47.9 billion, down from $51.6 billion in November 2023.
The external debt component decreased from $30 billion in 2023 to $27.6 billion in November 2024. Conversely, domestic debt increased to GH¢311.7 billion, representing 30.5% of GDP, up from GH¢275.8 billion in February 2024. This increase in domestic debt is largely due to persistent borrowing on the treasury market.
Ghana’s economy has shown resilience amidst these fiscal challenges. The country’s GDP was valued at GH¢1.02 trillion as of November 2024, reflecting steady growth. This economic expansion is expected to be bolstered by the government’s strategic investments in key sectors, made possible by the savings from reduced borrowing costs.
The government’s commitment to fiscal consolidation is further evidenced by its engagement with international financial institutions. In October 2024, Ghana reached a staff-level agreement with the International Monetary Fund (IMF) on the third review of a $3 billion loan program.
This agreement followed significant progress in restructuring the country’s public debt, with over 90% of bondholders approving the overhaul of $13 billion in Eurobonds. The loan program, which extends until 2026, aims to reduce Ghana’s debt by $4.7 billion and provide $4.4 billion in cash flow relief.
Moody’s Investors Service recognized these efforts by upgrading Ghana’s long-term local and foreign currency issuer ratings from “Caa3” and “Ca” to “Caa2” in October 2024. The outlook was also revised to “positive,” reflecting the country’s extensive debt restructuring efforts and fiscal consolidation under the IMF program.
Despite these positive developments, challenges remain. The domestic debt has increased due to persistent borrowing on the treasury market, rising from GH¢275.8 billion in February 2024 to GH¢311.7 billion in November 2024. Additionally, the government’s budget deficit stood at 3.9% of GDP as of July 2024, with the primary balance showing a deficit of 1.8%.
To address these challenges, the government is focusing on enhancing revenue collection and managing expenditures more effectively. These measures are expected to complement the savings from reduced borrowing costs, further strengthening the country’s fiscal position.
Finally, the reduction in T-bill rates has provided Ghana with an opportunity to redirect resources toward critical sectors of the economy.
Coupled with ongoing debt restructuring efforts and fiscal consolidation measures, the country is on a path toward sustainable economic growth and improved financial stability. However, continuous efforts are needed to manage domestic debt levels and budget deficits to ensure long-term prosperity for all Ghanaians.