Ghana’s treasury bill yields have plummeted since the start of the year, with the 91-day bill yield dropping 12.55% to 15.86% and the 182-day bill yield falling 12.04 percentage points to 16.93%.
Finance Minister Dr. Cassiel Ato Forson is hailing this as a major achievement, but the Institute of Public Policy and Accountability (IPPA) is sounding the alarm, calling the decline “artificial” and warning of potential economic repercussions.
The Dark Side of Falling T-Bill Yields
According to IPPA, the rapid decline in T-bill rates doesn’t align with the Bank of Ghana’s monetary policy rate or the current average lending rates, which hover around 30%. This discrepancy could lead to:
– Capital outflows: Investors seeking better returns in alternative assets, such as the US dollar, may trigger a surge in demand for foreign currency, putting pressure on the Ghanaian cedi.
– Exchange rate pressures: The cedi’s volatility could reverse recent progress in curbing inflation and destabilize the local currency.
A Disconnect Between Fiscal and Monetary Policies
IPPA is urging the finance ministry to work closely with the Bank of Ghana to maintain a balanced approach to monetary policy. The institute emphasizes the need for fiscal discipline to ensure lower borrowing costs translate into economic expansion, rather than excessive government spending.
Cautionary Voices
– Kwamina Asomaning, Managing Director of Stanbic Bank and President of the Ghana Association of Banks, notes that while lower T-bill rates are beneficial, they’ve also increased demand for dollar-denominated assets, exacerbating pressure on the cedi.
– Dr. Gideon Boako, Deputy Ranking Member on Parliament’s Finance Committee, criticizes the Finance Ministry’s handling of T-bill rate reductions, calling them “artificial” and “unsustainable”.²
The Path Forward
To maximize the benefits of declining T-bill rates, Ghana must prioritize fiscal consolidation, use interest savings to reduce debt, and implement business-friendly policies. A gradual decline in inflation will also be crucial for the Ghanaian economy. As IPPA advises, the finance minister should focus on creating a stable interest rate environment, rather than rushing to celebrate an artificial deyields.6n T-bill yields.
Here is the full statement from IPPA
Ghana’s treasury bill yields have witnessed a significant decline since the beginning of the year. The yield on the 91-day bill has dropped sharply by 12.55% to 15.86%. That of the 182-day bill has also plummeted to 16.93%, a 12.04 percentage points fall. Finance Minister, Dr. Cassiel Ato Forson touted this as one of his major achievements since assuming office in February 2025. He wrote on his X page “In Just 50 days under President Mahama’s leadership, treasury bill rates have seen a historic decline”. This is welcoming but is the reality true? The Institute of Public Policy and Accountability does not think so. We believe it’s too early to rejoice.
Our reasons are:
The rapid fall in the T-bill rate does not correspond with the Bank of Ghana’s monetary policy rate and the current average lending rates hovering around 30% at the end of December 2025. We, therefore, believe that the celebration of an artificial fall in T-bill rates by the finance minister and his cohorts is premature. It also does not suggest that the government has been proactive in its fiscal management as it is in its early days. Even if it is so, then the government is enjoying the fruit of the erstwhile government which they have accused of several times though the International Monetary Fund report on December 2, 2024, stated that Ghana’s performance under the Fund-Programme has been generally satisfactory, and reform efforts are paying off.
Similarly, the previous regime deliberately kept T-bill yields at their levels to correspond with the current inflation to discourage investors from purchasing foreign-denominated assets, particularly the US dollar. This policy is to keep the exchange rate stable. As we speak T-bill yields are far below the prevailing inflation rate, hence it does not make sense to invest in the short-term instruments and earn a return, lower than the current inflation. Though the demand for T-bills has remained strong (since it is the only source of debt investments for investors in the domestic market), it has started diminishing. Precisely, this is due to the sharp fall in the yield of the short-term securities. From a subscription of GHS20.499 billion on February 21, 2025, the total bids plunged to GHS9.264 billion on March 14, 2025. That shows investor appetite may be dwindling. Moreover, the average lending rates have remained above 30%, highlighting the expensive cost of credit in the country. This shows that the decrease in the T-bill rates does not reflect the current economic fundamentals. The prevailing economic stability is not the same as in 2018 when average lending rates hovered around 22%.
Again, the spread between T-bill rates and lending rates is about 14%, which shows the huge gap between the return on investments and the cost of borrowing. No rational investor will invest for a return of 15% per annum and borrow at 30%. That’s a huge loss. The investor would rather acquire US dollars or foreign assets, a situation that will increase demand pressures on the country’s foreign exchange market. This is a downside risk that will force the Bank of Ghana to intervene in the forex market leading to the depletion of our foreign exchange reserves which stood at about US$8.4 billion in December 2024.
The Institute of Public Policy and Accountability will advise the finance minister not to rush to celebrate what we describe as not the true state of the interest rates regime despite he seeking to score a political point. Ghana’s main fiscal problem is revenue collection and borrowings for consumption. We want to caution against excessive pressure on the Ghana cedi due to anticipated demand for the US dollar, thus reducing the gains achieved in bringing inflation down. This assertion is supported by the Managing Director of Stanbic Bank and President of the Ghana Association of Banks, Kwamina Asomaning, who notes that the drop in the T-bill rates is a good move and should be encouraged by players in the banking industry, however, the development has brought some sudden pressure on the cedi as investors consider the American greenback as a save haven to get returns on their investments.
As a public policy organisation, we believe a sustained fiscal discipline is crucial to ensure that lower borrowing costs translate into economic expansion rather than excessive government spending and artificial reduction in yields. Again, foreign exchange stability is a key factor in assessing the sustainability of lower domestic yields. However, we do not think so as the local currency is far from achieving a relative stability compared to the periods of 2018 and 2019. Historically, the sharp declines in interest rates have raised concerns about capital flight and exchange rate pressures.
In conclusion, we are advising the finance minister not to hurriedly celebrate an artificial decline in the T-bill yields but rather work with the monetary authorities or the Bank of Ghana to gradually improve the interest rate environment. He should always factor in the downside risk when pursuing a policy. We want the reduction in the T-bill rates to correspond with a sharp decline in lending rates. This will significantly ease the cost of doing business. Therefore, we want to see a fiscal policy that drives revenue mobilization but business friendly. Sustained fiscal discipline is crucial to ensure that lower borrowing costs translate into economic expansion rather than excessive government spending. To maximize the benefits of declining T-bill rates, Ghana must prioritise fiscal consolidation and use interest savings to reduce debt rather than fuel new expenditures.
With inflation still high, we believe that a gradual decline in inflation will be good for both retail and business consumers and overall, the Ghanaian economy. We are also observing keenly the Goldbod and other policy interventions that the government claims will help strengthen the exchange rate front. The policy of using gold reserves to manage the balance of payments and to also achieve economic stability through exchange rate must be monitored. This is to ensure that the purpose of setting up the framework to manage the gold reserve accumulation is achieved.
2025 Budget: Revenue target over ambitious, 24-hour economy must be explained further
The government in the 2025 Budget scrapped the 1.0% Electronic Transaction Levy (E-levy), abolished the Emission Levy on vehicles, eliminate the 1.0% tax on lottery winnings Ghana’s treasury bill yields have witnessed a significant decline since the beginning of the year. The yield on the 91-day bill has dropped sharply by 12.55% to 15.86%. That of the 182-day bill has also plummeted to 16.93%, a 12.04 percentage points fall. Finance Minister, Dr. Cassiel Ato Forson touted this as one of his major achievements since assuming office in February 2025. He wrote on his X page “In Just 50 days under President Mahama’s leadership, treasury bill rates have seen a historic decline”. This is welcoming but is the reality true? The Institute of Public Policy and Accountability does not think so. We believe it’s too early to rejoice.
Our reasons are:
The rapid fall in the T-bill rate does not correspond with the Bank of Ghana’s monetary policy rate and the current average lending rates hovering around 30% at the end of December 2025. We, therefore, believe that the celebration of an artificial fall in T-bill rates by the finance minister and his cohorts is premature. It also does not suggest that the government has been proactive in its fiscal management as it is in its early days. Even if it is so, then the government is enjoying the fruit of the erstwhile government which they have accused of several times though the International Monetary Fund report on December 2, 2024, stated that Ghana’s performance under the Fund-Programme has been generally satisfactory, and reform efforts are paying off.
Similarly, the previous regime deliberately kept T-bill yields at their levels to correspond with the current inflation to discourage investors from purchasing foreign-denominated assets, particularly the US dollar. This policy is to keep the exchange rate stable. As we speak T-bill yields are far below the prevailing inflation rate, hence it does not make sense to invest in the short-term instruments and earn a return, lower than the current inflation. Though the demand for T-bills has remained strong (since it is the only source of debt investments for investors in the domestic market), it has started diminishing. Precisely, this is due to the sharp fall in the yield of the short-term securities. From a subscription of GHS20.499 billion on February 21, 2025, the total bids plunged to GHS9.264 billion on March 14, 2025. That shows investor appetite may be dwindling. Moreover, the average lending rates have remained above 30%, highlighting the expensive cost of credit in the country. This shows that the decrease in the T-bill rates does not reflect the current economic fundamentals. The prevailing economic stability is not the same as in 2018 when average lending rates hovered around 22%.
Again, the spread between T-bill rates and lending rates is about 14%, which shows the huge gap between the return on investments and the cost of borrowing. No rational investor will invest for a return of 15% per annum and borrow at 30%. That’s a huge loss. The investor would rather acquire US dollars or foreign assets, a situation that will increase demand pressures on the country’s foreign exchange market. This is a downside risk that will force the Bank of Ghana to intervene in the forex market leading to the depletion of our foreign exchange reserves which stood at about US$8.4 billion in December 2024.
The Institute of Public Policy and Accountability will advise the finance minister not to rush to celebrate what we describe as not the true state of the interest rates regime despite he seeking to score a political point. Ghana’s main fiscal problem is revenue collection and borrowings for consumption. We want to caution against excessive pressure on the Ghana cedi due to anticipated demand for the US dollar, thus reducing the gains achieved in bringing inflation down. This assertion is supported by the Managing Director of Stanbic Bank and President of the Ghana Association of Banks, Kwamina Asomaning, who notes that the drop in the T-bill rates is a good move and should be encouraged by players in the banking industry, however, the development has brought some sudden pressure on the cedi as investors consider the American greenback as a save haven to get returns on their investments.
As a public policy organisation, we believe a sustained fiscal discipline is crucial to ensure that lower borrowing costs translate into economic expansion rather than excessive government spending and artificial reduction in yields. Again, foreign exchange stability is a key factor in assessing the sustainability of lower domestic yields. However, we do not think so as the local currency is far from achieving a relative stability compared to the periods of 2018 and 2019. Historically, the sharp declines in interest rates have raised concerns about capital flight and exchange rate pressures.
In conclusion, we are advising the finance minister not to hurriedly celebrate an artificial decline in the T-bill yields but rather work with the monetary authorities or the Bank of Ghana to gradually improve the interest rate environment. He should always factor in the downside risk when pursuing a policy. We want the reduction in the T-bill rates to correspond with a sharp decline in lending rates. This will significantly ease the cost of doing business. Therefore, we want to see a fiscal policy that drives revenue mobilization but business friendly. Sustained fiscal discipline is crucial to ensure that lower borrowing costs translate into economic expansion rather than excessive government spending. To maximize the benefits of declining T-bill rates, Ghana must prioritise fiscal consolidation and use interest savings to reduce debt rather than fuel new expenditures.
With inflation still high, we believe that a gradual decline in inflation will be good for both retail and business consumers and overall, the Ghanaian economy. We are also observing keenly the Goldbod and other policy interventions that the government claims will help strengthen the exchange rate front. The policy of using gold reserves to manage the balance of payments and to also achieve economic stability through exchange rate must be monitored. This is to ensure that the purpose of setting up the framework to manage the gold reserve accumulation is achieved.
2025 Budget: Revenue target over ambitious, 24-hour economy must be explained further
The government in the 2025 Budget scrapped the 1.0% Electronic Transaction Levy (E-levy), abolished the Emission Levy on vehicles, eliminate the 1.0% tax on lottery winnings