Gov’t borrowing threatens private sector – Analyst warns
By: Rebecca Okine
Economic analyst Emmanuel Boateng has raised fresh concerns about the government’s aggressive borrowing strategy through treasury bills, warning that it risks crowding out private sector access to credit and slowing the country’s economic recovery.
Speaking on Business Breakfast on Zed 101.9 FM on July 22, 2025, Mr. Boateng made the remarks in response to the latest treasury bill auction results released by the Bank of Ghana on Friday, July 17.
The report revealed that the government received bids worth approximately GHS 21 billion, nearly four times its original target of GHS 5.44 billion.
“Government borrowing continues to soak up the liquidity within the economy. There isn’t a separate money supply for government and another for households or businesses. It’s the same pool of funds,” Mr. Boateng said.
According to him, when the government absorbs the majority of available liquidity through its securities, the private sector is left competing for fewer funds.
“If government is the one getting all the funds by issuing treasury bills, then all the money supply flows to the government. That’s what we call crowding out,” he explained.
Mr. Boateng warned that commercial banks may increasingly prefer government securities over private sector loans.
“Banks exist to create loans, but if they prefer low-risk short-term securities over loans with higher default risks and longer durations, they stop lending to the private sector,” he stated.
The economic analyst stressed that lending to Small and Medium Enterprises (SMEs) and households is essential for job creation and sustainable growth.
“When banks shift investments away from SMEs and toward government securities, the private sector could stagnate, and that will ultimately slow our economic recovery,” he noted.
Mr. Boateng called on policymakers to maintain a delicate balance between domestic debt management and private sector development.
He urged the Bank of Ghana to closely monitor the trend and ensure excessive government borrowing does not derail credit access for businesses and individuals, whom he described as the backbone of economic transformation.
The government’s increased reliance on treasury bills comes amid ongoing efforts to bridge fiscal gaps without resorting to external borrowing.
However, analysts like Mr. Boateng caution that while such measures may provide short-term relief, they could carry long-term consequences for economic resilience and private sector growth.
The Bank of Ghana has yet to respond to the concerns raised, but the implications of the oversubscribed auction are expected to dominate upcoming economic policy discussions.
