Ghana’s Treasury bills market continues to face challenges as Bank of Ghana bills offering higher yields draw investors away from government securities, creating liquidity pressures for short term debt auctions in recent weeks.
The government’s Treasury bills (T-Bills) auctions have experienced persistent volatility in recent weeks as investors weigh competing options in Ghana’s money market, according to Bank of Ghana auction data.
Market analysts attribute the subdued demand partly to the Bank of Ghana’s open market operations, which offer bills at yields typically higher than comparable government Treasury bills. This competitive dynamic diverts liquidity away from government securities toward central bank instruments, particularly during periods when both institutions simultaneously seek funds from the same investor pool.
Treasury bill yields have declined substantially from the elevated levels seen earlier in 2025, when rates exceeded 30 percent. Current yields on the 91 day bill hover around 10 to 11 percent, with the 182 day and 364 day maturities trading between 12 and 13 percent, according to recent Bank of Ghana reports.
The yield compression reflects improved macroeconomic conditions, including lower inflation and relative currency stability. However, the lower returns have not always translated into stronger investor appetite, as liquidity constraints in the banking sector limit available funds for government paper.
Financial analysts at Databank and other market research firms note that Bank of Ghana bills serve a dual purpose. They help the central bank manage liquidity in the financial system while providing banks with short term investment options. When the central bank aggressively mops up liquidity through its own bills, commercial banks have less capacity to participate in government auctions.
The pattern shows government accepting all submitted bids in several recent auctions without rejections, suggesting acute need for cash to meet expenditure obligations. This approach prioritizes funding over cost optimization, as the Treasury seeks to avoid payment delays that could damage market confidence.
The dynamics illustrate the delicate balance monetary authorities must strike. While Bank of Ghana operations aim to control inflation and stabilize the cedi, aggressive liquidity management can inadvertently constrain government’s ability to raise domestic financing at favorable rates.
Market observers expect the pattern to continue unless there is better coordination between fiscal and monetary operations or unless Treasury bill yields rise enough to compete effectively with Bank of Ghana instruments.
