Deputy Minister of Finance, Dr. John Kumah has said that the government’s Domestic Debt Exchange program has led to a drop in Treasury Bill interest rates from 35 to 24 percent.
President Nana Akufo-Addo presented the State of the Nation Address in Parliament on Wednesday, outlining some of the government’s significant accomplishments.
In a debate on the address, John Kumah says that the government’s DDEP is yielding excellent economic transformation effects.
“Last week, the treasury bill rate in the country was at 35 percent. Today as we speak, the treasury bill rate has been reduced to 24 percent because of the DDEP. We had oversubscription and even at 24 percent, there is an oversubscription of 121 percent. We are going to see a further reduction in the coupon rate of T-Bills. What that portends for our country in the future is that inflation will come down, cost of borrowing for the private will also go down and this will restore economic stability and inclusive growth of our economy.”
Executive Director of Dalex Finance, Joseph Jackson commended the government’s decision to reject bids for the 91,182 and 364-day notes with yields greater than 35% in a recent T-Bills auction on March 3, 2023.
He sees this as an important step in addressing the excessive interest rates on government assets.
On Friday, March 3, 2023, the government rejected all offers from investors for the sale of Treasury notes, expressing worries that the returns were too high to sustain.
It was hoping to raise 2.78 billion through T-bills this week to refinance maturing notes worth 2.55 billion, but the rate was deemed too high.
According to sources, the government is currently seeking offers on Treasury bonds with yields less than 30%, signalling its determination to lower borrowing costs for itself and other investors.
Treasury bill interest for the previous three months totals $4.416 billion.
During the previous three months, the interest expense on the Government of Ghana Treasury bills is anticipated to be GH4.416 billion.
In the previous three months, the government allegedly purchased a total of GH33.08 billion in T-bills.
The government sold treasury instruments at an average yield of 35%.
The government secured GH12.60 billion at a 35.72% interest rate in December 2022.
In January 2023, the government seems to have lowered its appetite for short-term securities, mobilizing GH7.3 billion at a rate of 35.66%.
However, government borrowing via T-bills increased dramatically to GH13.1 billion in February 2023, at an interest rate of 35.50%.
