Government’s decision to cut interest rates on T-Bills is laudable – Joe Jackson

Executive Director of Dalex Finance, Joe Jackson, has lauded government’s decision to reject bids made for the 91,182 and 364 day bills with yields over 35% in a recent T-Bills auction on March 3, 2023.

This, he notes is a crucial step towards addressing the high interest rates on government securities.

Government rejected all the bids for the sale of Treasury bills from investors on Friday March 3, 2023, citing concerns that the yields were too expensive to maintain.

It was rather seeking to raise ¢2.78 billion from the T-bills this week to refinance maturing bills worth ¢2.55 billion, but it described the yield as too expensive

According to sources, the government is now demanding bids for Treasury bills with yields less than 30%, indicating its commitment to reducing the cost of borrowing for itself and other investors.

Speaking in an interview, Mr Jackson said the decision to reduce yields is good as the high interest rates on Treasury Bills were unsustainable for the government and could lead to debt distress if not addressed.

Interest on treasury bills for last 3 months hits ¢4.416bn

Interest cost on Government of Ghana Treasury bills for the last three months is estimated at GH¢4.416 billion.

Government reportedly bought a total of GH¢33.08 billion worth of T-bills in the last three months.

The treasury instruments were sold by government at an average yield of 35%.

In December 2022, the government secured GH¢12.60 billion at an interest rate of 35.72%.

Government seemed to have reduced its appetite for short-term securities in January 2023, mobilising GH¢7.3 billion at a rate of 35.66%.

However, the government borrowing from T-bills significantly shot up to GH¢13.1 billion in February 2023 at an interest cost of 35.50%.