Ghana’s government rejected ¢4.1 billion ($342 million) in treasury bill bids last week despite an 80% oversubscription, as officials doubled down on efforts to curb borrowing costs and stabilize debt dynamics ahead of a critical budget presentation.
The Bank of Ghana (BoG) reported investors submitted ¢10.3 billion in bids against a target of ¢5.7 billion, marking the fifth consecutive week of aggressive demand for short-term debt.
Authorities accepted ¢6.2 billion, allowing interest rates on 91-day, 182-day, and 364-day bills to plummet to 17.72%, 18.97%, and 19.98%, respectively—their lowest levels since 2022. The sustained rate decline reflects a deliberate strategy to reduce debt-servicing pressures, analysts say, as Ghana navigates its post-default recovery under a $3 billion IMF bailout.
Debt Strategy Meets Investor Appetite
The oversubscription wave, fueled by a stalled bond market and limited alternatives since Ghana’s Domestic Debt Exchange Program (DDEP), has enabled the government to slash borrowing costs while tempering fresh debt accumulation. “Rejecting excess bids is a tactical move to avoid overborrowing at higher rates,” said Courage Martey, senior economist at Accra-based Databank Group. “But it also signals confidence that liquidity will remain ample.”
Investors, however, face mounting frustration as rejected bids cascade into subsequent auctions. Last week’s acceptance of just ¢482 million in excess demand suggests officials remain wary of reigniting rate pressures despite a glut of liquidity in the financial system.
Cedi Volatility Looms
BoG Governor Johnson Asiamah cautioned that sharply lower T-bill yields, while easing fiscal strain, risk destabilizing the cedi if foreign investors pivot to higher-yielding assets. “There’s an emerging risk of exchange rate pressure if rate declines outpace external sector gains,” he said during a national economic forum. The cedi has lost 14% against the dollar this year, complicating inflation efforts.
Ghana plans to raise ¢8.3 billion in its next auction, with analysts expecting another oversubscription as banks and pension funds chase limited safe-harbor assets. The DDEP’s suspension of long-term bond issuance has funneled demand into T-bills, though the government aims to gradually extend debt maturities post-IMF review.
Budget Watch
The borrowing crunch comes ahead of Ghana’s 2025 budget presentation, expected to outline further fiscal consolidation measures. With public debt at 71% of GDP, officials face mounting pressure to lock in lower rates while avoiding a liquidity squeeze.
“The strategy is working for now, but sustainability hinges on balanced demand for cedi assets,” said Accra-based Financial Journalist Roger A. Agana. “The budget must reassure markets that growth and stability can coexist.”
As Ghana walks a tightrope between debt relief and investor returns, the weeks ahead will test whether rate repression can hold—or if the cedi’s fragility forces a recalibration.
