The Ghana National Chamber of Commerce and Industry (GNCCI) has raised concerns over the government’s continued reliance on Treasury bills (T-bills) to finance domestic debt obligations, warning that this could have significant consequences for the private sector.
Reacting to the 2025 Budget, GNCCI CEO Mark Badu Aboagye cautioned that the government’s heavy borrowing from the domestic market could crowd out private sector access to credit, as banks may prefer lending to the government due to the low-risk nature of T-bills.
“A major risk we identified is that a significant portion of the budget deficit will be financed locally, meaning the government will borrow more from the domestic market. This will crowd out private sector access to credit, push interest rates higher, and make it more difficult for businesses to expand,” he warned.
Mr. Badu Aboagye pointed out that the competition for funds between the government and businesses will likely drive up interest rates, making borrowing more expensive for entrepreneurs and industries that need capital to grow. He advised businesses to prepare for potential liquidity constraints and rising lending costs.
Background: Government’s Borrowing Strategy
Ghana’s government will continue to depend heavily on T-bills to finance domestic debt obligations, as it remains one of the few available borrowing options following the country’s debt restructuring program. This was revealed by Finance Minister Dr. Cassiel Ato Forson during his 2025 Budget Statement, where he outlined the government’s fiscal strategy.
Dr. Forson noted that 65% of the total domestic financing requirement for 2025, amounting to GH₵36.9 billion (2.6% of GDP), will come from short-term domestic debt instruments, including T-bills. This underscores the government’s reliance on the T-bill market to manage liquidity and meet its financial obligations.
He further explained that the significant treasury bill maturities inherited by the government—totaling GH₵111.1 billion requiring weekly rollovers—add pressure on cash flow and liquidity requirements. The Finance Minister acknowledged the burden of these obligations but assured that the administration is committed to smoothing out Ghana’s debt redemption profile and mitigating refinancing risks through effective liability management strategies.
Additionally, Ghana faces a major domestic debt service burden of GH₵150.3 billion over the next four years, with GH₵57.6 billion due in 2027 and GH₵52.5 billion in 2028. These two years represent what the minister described as “cancerous humps” that pose significant risks to the economy.
Dr. Forson also indicated that the government plans to reopen the domestic bond market cautiously to extend the maturity profile of debt, reducing dependence on short-term borrowing and lowering interest costs.
As T-bill rates continue to fall, the government is banking on strong investor confidence and reduced borrowing costs to make this financing strategy sustainable. However, analysts caution that with such high reliance on short-term debt, Ghana must carefully manage its liquidity to avoid a rollover crisis in the coming years.
Call for Business Preparedness
With this backdrop, GNCCI is urging businesses to brace themselves for potential challenges in accessing credit. Mr. Badu Aboagye emphasized that businesses should explore alternative financing options and adopt cost-saving measures to navigate the expected tightening of credit conditions.
“The private sector must prepare for any possible shocks that may come with increased government borrowing. We encourage businesses to explore innovative funding models, including equity financing and strategic partnerships, to mitigate the impact of high interest rates,” he advised.
While acknowledging the need for government financing, the GNCCI CEO stressed that a balanced approach is needed to ensure that businesses are not left struggling for access to affordable capital. He urged policymakers to consider measures that would incentivize banks to lend more to businesses instead of prioritizing government securities.
