The government of Ghana has adopted a more cautious approach to borrowing, rejecting a substantial portion of bids totaling GH¢2.36 billion from the GH¢4.05 billion submitted for 91-day, 182-day, and 364-day treasury bills at an auction held on April 4, 2025. Despite receiving lower-than-expected bids, which fell short of the target by GH¢334 million, the government accepted GH¢1.69 billion in bids, signaling ongoing under-subscription trends. The 91-day bill attracted the highest demand at GH¢3.38 billion, with GH¢1.44 billion accepted, while the longer-term bills received considerably fewer bids. This marks the third consecutive time in 2025 the government has returned bids, indicating a shift in investor sentiment toward short-term government securities.
The government’s selective acceptance of bids and rejection of a significant portion suggest it is being more cautious about the interest rates it is willing to pay. Analysts point out that this conservative borrowing stance may be discouraging investors who are seeking higher returns in a high-inflation environment. Yields on the accepted 91-day and 182-day bills showed slight declines, with the 91-day bill falling to 15.64% and the 182-day bill dropping by 23 basis points to 16.50%. These trends reflect the government’s increasing reluctance to accept bids at high rates that could push its debt servicing costs higher.
The persistent underperformance of Treasury bill auctions is raising concerns for Ghana’s fiscal management. Should the government continue to face difficulties in raising sufficient domestic funds, it may be forced to turn to more expensive alternatives, including commercial loans or accelerating external borrowing. These funding sources come with higher interest rates and greater exposure to exchange rate risks. Analysts suggest that Ghana’s ongoing IMF program and the broader fiscal consolidation efforts will require a delicate balance between maintaining borrowing discipline and meeting urgent financing needs.
Investor confidence could be at risk if the government continues to reject bids in an already weary market, potentially leading to diminished participation in future auctions. There is a growing concern that this pattern might signal to investors that the government is unwilling to offer competitive returns, which could lead to higher risk premiums or an exit from the market altogether. To avoid this, experts recommend that the government prioritize investor confidence by ensuring transparency and stability in its economic policies, while exploring alternative funding sources such as foreign investors or domestic capital markets to reduce reliance on short-term debt instruments.