Analyst Urges Higher Interest Rates To Boost T-Bill Market Confidence
Economic Analyst Emmanuel Boateng has called on the government to increase interest rates, lower its issuance targets, and improve communication on fiscal consolidation to boost investor confidence in Ghana’s Treasury Bill (T-Bill) market. His call comes on the back of the latest government Treasury Bill auction undersubscription, raising GH¢4.619 billion against a planned GH¢5.329 billion, representing a 13% shortfall.
Speaking on Business Breakfast on Zed, Mr. Boateng explained that data released by the Bank of Ghana showed that the majority of bids concentrated on the shorter-term 91-day bill, which attracted GH¢3.74 billion. The medium-term 182-day bill received GH¢567 million in bids, while the 364-day bill had GH¢309.3 million tendered, with the government accepting all the bids submitted.
He attributed this shortfall to escalating financing needs driven by either a lack of funds or insufficient fiscal consolidation measures. Boateng stressed that simply raising interest rates is insufficient; the government must implement significant rate increases or deliver concrete improvements in fiscal management to regain market confidence.
“The government must increase interest rates, lower its auction, and provide clear communication on its fiscal consolidation, or else the undersubscription will continue,” he noted.
Emphasizing the impact of a GH₵700 million shortfall, Boateng noted the strain on government cash flow, affecting salaries, contracted payments, debt servicing, and statutory transfers. He warned that rollover rates would intensify as much of the issuance aims to refinance maturing debt rather than finance new spending.
Mr. Boateng acknowledged that rising borrowing costs and negative market signals present additional challenges, underscoring the importance of transparent communication with investors about fiscal performance to clarify medium-term prospects.
Finally, he underscored the need to accelerate revenue mobilization efforts to bridge the growing financing gap caused by repeated shortfalls in the T-Bill auctions.
