The first quarter of the 2025 fiscal year has come to an end, and an analysis by The High Street Journal has revealed that the government has been very active on the domestic short-term market (T-Bill) relatively to the same period last year.
Government borrowing from T-Bills in the first quarter of this year rose to hit a total of GH¢ 95 billion. When compared to the same period last year, i.e first quarter of 2024, government borrowing was GH¢ 64 billion. This represents a little over 48% increase between the two periods.
Data curated from the weekly auction reports published by the Bank of Ghana reveals that the government borrowed a total of GH¢ 17.85 billion in January 2024 compared to a staggering GH¢ 38.45 billion in January 2025, marking about 115% increase.
In February 2024, the borrowing from the short-term market amounted to GH¢ 22.25 billion compared to almost a similar amount of GH¢22.43 billion in February 2025, just a less than 1% increase.
In March 2024, government borrowing amounted to GH¢24.02 billion. However, the figure significantly increased in March 2025 to GH¢3.14 billion, representing a little over 42% increase.
With Ghana pushed out of the international capital market after defaulting in its debt obligation and the suspension of the domestic bonds market after the DDEP, the short-term market remains the source for the government to raise funds.
Borrowing from the T-bills market is often used to manage short-term liquidity gaps. However, the trend of borrowing in the last quarter raises concern for the country’s debt stock.
The good side is that the interest rate on the bills has drastically trended downwards in the last quarter compared to the same period last year. This is positive for the cost of borrowing. However, it has high implications for the public debt stock levels.
The glimmer of hope is in the promise by President John Mahama, who has vowed to ensure fiscal discipline through restoring macroeconomic stability, reforming public spending, and reducing domestic borrowing.
Although the borrowing from the short-term market in the first quarter of 2025 is relatively staggering, it could possibly be a temporary measure to honor maturing obligations inherited from the previous regime while awaiting inflows from revenue-enhancing measures and multilateral support.
Should this massive borrowing from the market continue, the private sector will bear the brunt as it will be crowded out, making the cost of credit very expensive. This also has implications for economic growth as the private sector is deemed as an “engine of growth.”
With three more quarters to go in the fiscal year, the government’s ability to reverse the current borrowing trajectory will be closely watched to ascertain how it implements its fiscal consolidation measures to control borrowing from the domestic market.
