Overdraft from the Central Bank has dropped 68 percent from April, latest domestic debt data from the regulator showed Monday.
At the end of April, overdraft at the Central Bank stood at the highest level ever of 444 million U.S. dollars, and declined in subsequent months to stand at 139 million dollars at the end of July.
The decline makes the overdraft to account for 0.8 percent of total domestic debt, down from 2.4 percent.
Analysts noted that the law allows the government to withdraw from its Central Bank account, an amount equal to 5 percent of the last audited annual revenues.
With annual revenue collection standing at about 8.9 billion dollars, the government had reached the legal withdrawal limit.
The decline in overdraft, however, was necessary because it is equated to printing of more cash, which has the potential to causing inflationary pressure.
But Treasury is seeking cash elsewhere, in particular through government securities.
Last week, the government sought to sell 90-day Treasury bills worth 40 million dollars at an interest rate of 8.3 percent.
It received bids worth 149 million dollars as investors sought to cash in on the rising interest rates at the debt market. Treasury accepted bids worth slightly over 100 million dollars.
Similarly, from the 182-day and 364-day bills worth 59 million dollars each it had sought to sell, Treasury received bids worth 120 million dollars and 70 million dollars respectively.
It accepted bids worth 110 million dollars and 60 million dollars respectively as it sought more cash for budgetary support.
Unlike the overdraft, whose interest rate is calculated at the prevailing Central Bank rate which currently stands at 8.5 percent, yields on Treasury bills and bonds are determined by market forces.
The government is, therefore, borrowing at best rate particularly through 91-day bills, pushing the overall domestic debt to slightly above 18 billion dollars, according to the Central Bank data. Enditem
Source: Xinhua/News Ghana