Ghana has experienced a rise in interest rates on government securities, with the interest on the 91-day treasury bill reaching 26%, the 182-day bill at 27.56%, and the 364-day bill at 30.6%. This surge in interest rates poses a challenge to the government’s debt restructuring efforts, as experts previously warned that continued reliance on the treasury bill market could undermine the goals of the restructuring program.
The government’s reliance on the treasury bill market is partly due to limited access to international capital markets and the relatively dormant state of the local bonds market. While the Domestic Debt Exchange Programme (DDEP) and the approval of the country’s US$3 billion extended credit facility program with the International Monetary Fund (IMF) temporarily helped reduce interest rates, the recent increase suggests ongoing challenges.
The IMF has noted that Ghana’s debt restructuring plans still necessitate the issuance of treasury bills in the near term, which exposes the country to uncertainty in domestic market conditions. The government has indicated its intention to raise GH¢38.9 billion from the T-bill market between July and September 2023. Despite the challenges, the government is engaging with various partners, including the World Bank and African Development Bank, to unlock other sources of financing.
The ongoing debt restructuring efforts are a key component of Ghana’s IMF program, aiming to bring the country’s debt to sustainable levels by 2028. As of June 2023, Ghana’s total public debt stood at GH¢575.5 billion. The success of the debt restructuring will be critical in achieving long-term fiscal stability and economic growth.