Government to borrow Ghc200bn from treasury bill market in 2025

The treasury market will lend the government about GH¢200 billion in 2025.

GH¢3.9 billion versus GH¢4.2 billion is the average weekly uptake, which is less than the 2024 forecast of GH¢220 billion.

Databank Research stated that the government may probably shift to longer-term financing options since access to foreign money is becoming easier and the majority of macroeconomic indicators show a sustained recovery.

This change is anticipated to happen after the first quarter of 2025, though, as the requirement for treasury refinances may continue to drive demand for short-term funding as it manages maturities following a period of high uptake in the second half of 2024.

Meanwhile, it is anticipated that the fixed-income market would be significantly impacted in 2025 by governmental actions to compress Treasury bill yields and the easing of inflation.

Databank Research stated that it anticipates that investors’ reaction to yield compression may be deferred until mid-2025, notwithstanding the dovish monetary policy and expected reduction of inflation in 2025.

“We believe that significant policy measures to reduce sovereign borrowing costs will be the main factor in the compression from a high of 27% as of November 2024. Additionally, the government’s hints at reducing reliance on money market funding, along with potential longer-dated securities issuances, suggest that any new initiatives are likely to occur by mid-2025, further supporting a potential decline in yields at that time”, it stated in a report.

Further supporting a possible drop in rates at that time, the paper noted that the government’s indications of lessening its reliance on money market funding and possible longer-dated securities issuances indicate that any new initiatives are likely to take place by mid-2025.

“In 2025, we foresee a notable moderation in the Treasury’s demand for money market funding, driven by improved access to alternative funding sources and a strategic pivot towards long-term securities. We expect the ample decline in demand to offer the treasury some space to trim high T-bill yields”.

Source: Ghanatodayonline.com