Interest rates have begun to rise, but only slightly, as the fiscal economy’s troubles have spilled over into the monetary economy.
Interest rates on short-term financial instruments have risen marginally, according to the Bank of Ghana’s recent auctioning results of Treasury notes.
Despite maintaining a low interest rate policy, the government has been compelled to change its tune and accept a somewhat higher yield for short-term financial products.
This will assist the company reach its goal by attracting more domestic investors.
It also suggests that the domestic market is still strong, despite the recent downgrade of Ghana’s credit worthiness by Moody’s and Fitch.
The interest cost for both the 91-day and 182-day T-Bills increased by around 0.20 percent, according to the auction results.
The government, on the other hand, received a little more than GHC1.511 billion from the selling of T-bills, but only GHC1.508 billion. It will be pleased because it exceeded its goal by a small margin.
The 91-day T-Bill was the most popular, according to the data. The investors paid GHC957 million for the property.
However, with growing T-Bill interest rates, the cost of financing will soon begin to rise, raising the cost of doing business.
Mixed development
Interest rates on the money market showed uneven developments across the yield curve.
In December 2021, the 91-day and 182-day Treasury bill rates fell to 12.49 percent and 13.19 percent, respectively, from 14.08 percent and 14.13 percent in December 2020.
Similarly, the rate on the 364-day instrument fell somewhat from 16.98 percent to 16.46 percent over the same time period.
Rates on 2-year and 5-year bonds rose to 19.75 percent and 21.00 percent, respectively, from 18.50 percent and 19.85 percent, while rates on 3-year, 6-year, 7-year, and 10-year bonds fell sharply.
The rates on 15-year and 20-year bonds, on the other hand, stayed steady throughout the same period, at 19.75 percent and 20.20 percent, respectively.
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