The government of Ghana has announced its intention to borrow GH¢3.43 billion from the treasury market in the coming week.
This is to cover its short-term liabilities, including GH¢3.26 billion worth of bills that are due to mature. The treasury market is where the government sells short-term securities such as treasury bills to raise funds.
The government will offer 91-day, 182-day and 384-day treasury bills to investors this week. The treasury market has been the main source of financing for the government in recent times, as it faces fiscal challenges amid the COVID-19 pandemic.
The pandemic has affected revenue collection and increased spending needs, resulting in a large fiscal deficit and a high debt burden. However, some analysts are concerned about the implications of the government’s heavy reliance on the treasury market.
They argue that this could increase the domestic debt in 2023 and crowd out private sector credit. They also point out that the interest rates on the treasury bills are high, reflecting the high risk premium and inflation expectations.
According to the World Bank, Ghana’s economy is expected to grow by 2.7% in 2023, lower than the Sub-Saharan Africa average of 3.6%.
The growth prospects depend on the successful implementation of the COVID-19 Alleviation and Revitalization of Enterprises Support Program, which aims to support businesses and households affected by the pandemic. The program also seeks to enhance revenue mobilization and fiscal consolidation, as well as improve debt management and transparency.
