• Experts sound alarm bells
Ken Ofori-Atta, Finance Minister

T-bills threat to debt restructuring efforts — Experts sound alarm bells

Financial analysts and experts have warned that the government’s continuous reliance on the treasury bill market to raise short-term money to finance its operations could defeat the purpose of the debt restructuring programme.


Currently, the international capital market is closed to the country and post-Domestic Debt Exchange Programme, the bond market has also been dormant, with little or no trades happening on the market.

This, therefore, leaves the country with no other option than to rely on the treasury bill market to raise short-term money to finance its expenditure.

In the week ending May 26, 2023, the government raised GH¢2.03 billion from the 91-day T-bills, accepting all the bids that were tendered at 20.56 per cent interest.

The government also raised GH¢874 million and GH¢274 million from the 182-day at 23.3 per cent and 364-day T-Bills at 27.59 per cent, respectively, bringing the total money raised on the T-bill market in the week to GH¢3.18 billion.

The International Monetary Fund (IMF) in its report on Ghana’s three-year Extended Credit Facility (ECF) programme noted that the country’s debt restructuring plans still leave a substantial need for T-bill issuance in the near term.

The fund said this exposes the country to uncertainty in domestic market conditions, though the program implementation and outreach may help mitigate financing risks.

The DDEP saw the government swap a total of GH¢82 billion of old bonds to 12 new ones at a reduced coupon rate and longer tenors.

The exchange of Cocoa Bills and dollar-denominated bonds is also currently at an advanced stage.

The Creditor Committee co-chaired by China and France has also been formed to begin the restructuring of the country’s US$5.4 billion debt to bilateral partners.

The government has also, since December 2022, been engaging with its commercial creditors to restructure debts totalling US$14 billion.

Threat to govt’s agenda 

Speaking in an interview with the Graphic Business, Economist and Research Lead at GCB Capital, Courage Boti, said the reliance on the T-bill market impedes the government’s agenda to prolong the yield curve and bring down borrowing costs.

He noted that since DDEP, the local bonds market had not been the same and has been dormant.

He said the only certainty was that T-bills were excluded and that is why there are still lots of transactions ongoing.

“As things stand now, the bond market even after DDEP hasn’t corrected. If bonds are 10 per cent maximum and you have T-bills at 20 per cent for the 91-day, then there is no incentive to trade bonds,” he stated.

He said if other financing options do not come in quickly, this would derail the government’s debt restructuring efforts.

Financing from devt partners 

Mr Boti noted that, with the IMF programme and the potential of unlocking other financings from development partners, it looks like, in the coming months, the country could reduce the dependence on the T-bill market when those funds begin to trickle in.

The World Bank has already pledged US$1.6 billion to the country over a three-year period, with the African Development Bank also expected to follow suit.

Mr Boti said other development partners could also come through for the country, adding that “if all of these crystalises then the need for short-term borrowing on the local market could ease a bit.”

“The option of financing is just limited to T-bills now but that is something that will correct once the funding sources envisaged begin to flow in,” he stated.


Living within means 

Also speaking in an interview with the Graphic Business, a Senior Research Fellow at the Institute of Fiscal Studies, Dr Said Boakye, said the government must begin to live within its means.

He said with the international capital still closed, the government cannot continue to spend the same way and end up borrowing from the short-term market.

“If the international financing, which is long term, is closed, then we have to look for short term financing, which is problematic. But why should we go that way?

“The government must reconsider its strategy and try as much as possible to live within its means so that financing won’t be a problem,” he stated.


Dr Boakye said even if the government would have to rely on the short-term market, it should be critical expenditures.

“Borrowing can no longer be the norm because that is what got us here in the first place. So if we are getting some breathing space with the domestic restructure, we don’t know how the international debt negotiations will go yet so let’s wait for that and try to live within our means,” he explained.

He said relying on the short-term market would exacerbate the country’s debt problems.

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