The continuous rise in the interest rate on treasury bills is stirring fears for Ghana’s borrowing cost and rate of debt accumulation, but an analyst says the concern may be overstated.
Recent auctions have shown marginal increases across all maturities. For instance, the latest auction recorded the 91-day bill edged up to 11.19 percent, the 182-day closed at 12.64 percent, while the 364-day recorded the biggest movement, climbing to 12.98 percent.
For many observers concerned about the country’s debt, on paper, those numbers look like borrowing is getting more expensive, threatening the country’s debt accumulation.
However, for Patrick Edem Agama, Head of Trading and Business Development at Republic Securities Limited, in reality, the shift is far less dramatic. The analyst believes the rising rates are not a threat to the government’s borrowing cost or debt outlook.
Instead, he says the concerns may be exaggerated, but he was quick to add that the marginal rise reflects growing confidence in the money market.
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“What we are seeing is that interest is still mounting because confidence is increasing in the money market. We’ve seen rates going up marginally, but that might not be the main reason. We are seeing the 91-day clear at 11.19%, going up marginally by two basis points. We’ve seen the 182-day closing at 12.64%, going also by three basis points up. And then the big margin was felt in the 364-day that rose by seven basis points to close at 12.98%,” the analyst explained to Accra-based JoyNews.
He points out that the increases are measured in just a few basis points, tiny movements that do not fundamentally change the government’s cost of raising funds. Even the seven-basis-point rise on the one-year bill, the most noticeable jump, remains within a comfortable range.
More importantly, Agama urges observers to look beyond short-term signals. The broader policy direction, he notes, is still downward. With the central bank’s policy rate expected to ease over time, overall borrowing costs should follow the same path.
“The rise we are seeing in the interest rate is not so big to be able to push the borrowing cost up. We know the policy rate trend is downwards, so we expect that cost to be downwards, but we are not benchmarking too much on the short-term yields we are seeing on the market,” Patrick Agama indicated in an interview monitored by The High Street Journal.
For a country emerging from debt restructuring and working to stabilise its finances, the concerns are valid. Rising rates often trigger fears of ballooning debt and renewed fiscal pressure.
However, in this case, the analyst says the market movements appear more like a sign of normalisation than distress.
Moreover, the strong investor participation in the T-bill market suggests that confidence is returning, not fading. Investors are willing to lend, the government is still borrowing at manageable rates, and the small upticks are unlikely to derail debt sustainability.
