Following the announcement by the government, through the Minister of Finance, Dr. Cassiel Ato Forson, that Treasury Bill (T-Bill) rates are on a downward trajectory – a development signaling positive progress for the economy – the Executive Director of the Institute of Economic Research and Public Policy, Dr. George Domfe, has shared his perspective on the matter.
According to him, there is no need to celebrate the purchase of T-Bill with coupon rates between 19% and 22%.
He asserted that individuals who invest in T-Bills will not see any real value on their monies if inflation remains high.
In an interview with GhanaWeb Business, Dr. Domfe stated that, “This clearly portrays a lack of understanding of economics by some individuals in government. They make posts suggesting that the government has auctioned T-Bills at 19% and 22%, and for that reason, the Mahama government should be praised. This does not warrant any jubilation. Assuming the end-of-year inflation target is 19%, this means a zero or -3% real value for investment.”
“Inflation currently sits around 23%, while the lending rate, primarily driven by the Monetary Policy Rate (MPR), is between 34.5% and 35.5%. This implies that holding all other factors constant, the average Ghanaian who invests in T-Bills at the current rate is losing money in real terms,” he added.
The Executive Director of the Institute of Economic Research and Public Policy further stated that Ghanaians should brace themselves for an increase in non-performing loans.
“The government should desist from manufacturing economic indicators and figures to suit its agenda of appearing favorable in the eyes of the public. The international community and financial watchdogs like the World Bank and IMF would discredit Ghana if figures are fabricated for political reasons,” he warned.
On March 3, 2025, the Minister of Finance, Dr. Cassiel Ato Forson, announced that Ghana had saved approximately GH¢1 billion due to the recent reduction in Treasury Bill rates.
He stated that the savings would be redirected toward critical sectors of the economy to promote development and ensure a stable and prosperous environment for Ghanaians.
Speaking at the National Economic Dialogue under the theme “Resetting Ghana: Building the Economy We Want Together,” Dr. Ato Forson emphasised the need to reduce borrowing and lower the cost of debt as part of efforts to generate more funds for national development and economic restructuring.
It would be recalled that on Friday, February 28, 2025, Treasury Bill yields experienced a sharp decline.
According to the latest auction results from the Bank of Ghana, rates that started the year between 28% and 30% have now fallen to an average range of 20% to 22%.
At the start of the year, the 91-day Treasury Bill stood at 28.34% but has now dropped to 20.79%, reflecting a 760-basis point decline.
Similarly, the 182-day bill has fallen from 28.96% to 22.98%, a 600-basis point drop.
SA/AE
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