Government borrowed more through treasury bills in May compared to April this year, but the rates continue the marginal but steady decline.

The government borrowed GH¢19.2 billion in May, marking a 45.4% increase compared to April. However, this figure is 13.5% lower than the GH¢22.2 billion borrowed in March, which also had five auctions.

Treasury bills have become a key borrowing tool for the government following the Domestic Debt Exchange Programme, which temporarily halted regular bond issuance and Eurobond borrowing. Investors currently earn between 25% and 27.9%, depending on the maturity date.

The May 31 auction saw a 29.5% oversubscription, with the government borrowing over GH¢3.5 billion against a target of GH¢2.7 billion. Following the oversubscription, interest rates on treasury bills experienced marginal reductions, with the 91-day bill at 25.03%, the 182-day bill at 26.91%, and the one-year note at 27.9%.

Investors continue to prefer the 90-day bill despite its lower interest rate, reflecting decreased confidence in the long-term economy.

Treasury bill rates serve as benchmarks for deposit and loan interest rates, with changes influencing lending and deposit rates after a time lag. With a slight reduction in treasury bill rates and the Bank of Ghana's Monetary Policy Rate steady at 29%, significant changes in loan interest rates are not expected in June.

Meanwhile, the attractive returns on treasury bills, above 25%, offer better investments than the dollar, which has seen a 20% gain in the retail market and less than 15% on the inter-bank market. However, continued cedi depreciation could shift this advantage, a scenario the Central Bank aims to prevent.