The interest rate on Ghana’s Treasury bills (T-Bill) has fallen to the lowest level recorded since May 2022, following the latest auction (Tender 1945, held on March 7, 2025). This marks a continuation of the downward trend in government borrowing costs, as authorities intensify efforts to reduce excessive interest payments.

A total of GHC 10.3 billion in bids were submitted across the 91-day, 182-day, and 364-day bills, but the government accepted only GHC 6.22 billion, rejecting GHC 4.08 billion to maintain its stance against high yields. The 91-day bill, which attracted GHC 6.01 billion in bids, saw its interest rate drop from 20.79% in the previous auction to 17.7184%, the lowest in nearly three years.

The government accepted GHC 4.43 billion, rejecting GHC 1.58 billion. The 182-day bill’s rate declined from 22.99% to 18.9682%, with GHC 1.12 billion accepted out of GHC 1.92 billion tendered. The 364-day bill recorded the sharpest drop, falling from 22.70% to 19.9833%, as GHC 667 million was accepted out of GHC 2.37 billion in bids.

The continued decline in T-Bill rates comes despite inflation easing only slightly, from 23.5% in January to 23.1% in February 2025. While falling inflation typically supports lower yields, the sharp drop in interest rates has been driven primarily by the government’s aggressive strategy of rejecting costly bids, forcing investors to adjust their pricing expectations.

A review of Treasury bill auctions over the past few weeks has however shown a declining trend in total bids submitted, suggesting that investors may be holding back cash as rates continue to fall.

For context, total bids in Tender 1941 (Feb 7, 2025) stood at GHC 10.56 billion, dropping to GHC 6.82 billion in Tender 1942 (Feb 14, 2025) and rising slightly to GHC 7.72 billion in Tender 1943 (Feb 21, 2025). However, Tender 1944 (Feb 28, 2025) saw a significant spike to GHC 18.25 billion, before bids dropped again to GHC 10.3 billion in Tender 1945 (Mar 7, 2025).

While, the surge in bids during Tender 1944 may have been an attempt by investors to lock in higher rates before the government’s aggressive rate-cutting strategy took full effect, the sharp reduction in bids by Tender 1945 could suggest that some investors may now be holding off on purchasing T-Bills in anticipation of further rate declines or seeking alternative investments with better returns.

The government has set a higher target of GHC 8.26 billion for Tender 1946, signaling that it still requires substantial short-term funding despite the falling rates.

With real returns now negative, it remains to be seen whether investors will continue to accept lower yields or begin demanding a correction in the upcoming auction.