Government’s short-term borrowing costs fall as inflation drops
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Treasury bill rates have been falling steadily as inflation drops. I gathered the following data to show what’s happening.
Inflation
91-day T-bill
182-day T-bill
Week
December
15.40%
16.68%
17.94%
Dec-17
January
13.30%
15.94%
17.10%
Jan-30
February
13.20%
15.94%
16.99%
Feb-27
March
12.80%
17.51%
17.19%
Mar-27
April
13%
15.44%
16.47%
Apr-24
May
12.60%
13.21%
15.02%
May-22
June
11.91%
13.29%
Jun-16
The good news here is that government’s finances will be helped by the drop in borrowing costs. Also, this drop in T-bill yields will draw investors to alternative investments like stocks which is good for the GSE. Also, businesses should find it cheaper to borrow as lending to government does not look so attractive at the moment and thus investors will look to business for higher returns.
In March this year I wrote about how the government forced treasury bill rates down to reduce the amount they were spending on interest payments. This gave the government a few months of relief before the rates started creeping back up. The reality is that government and the financial sector…
The Government of Ghana last Friday, recorded an 33.83% oversubscription of its weekly auction of treasury bills despite interest rates experiencing a continuous downward slide. Government for its tender 1902 held on 10th May 2024 of securities to be issued on 13th May 2024 had set a total target of…
At the start of October, the interest rate on the 91-day treasury bill was 22.8699% and the rate for the 182-day bill was 24.691%. At the time of writing this post the rates were 16.6759% and 17.9365% respectively. I have already written about the fall in treasury bill interest rates…
