Ghana’s Treasury Bill Undersubscription Raises Fresh Questions on Fiscal Confidence Despite Inflation Decline

Yields Continue to Climb

Even as inflation slows, interest rates on T-bills continue to rise, reflecting growing competition for funds and cautious investor sentiment.

The 91-day yield rose by 11 basis points to 10.92%, while the 182-day bill increased from 12.49% to 12.61%. The 364-day bill also gained 6 basis points to 11.01%.

Financial analysts say the rising yields suggest that investors are demanding higher compensation for perceived risk, particularly amid government’s growing domestic borrowing needs.

“The yield curve’s steady climb shows that while inflation may be falling, investor confidence hasn’t fully recovered,”
— Economic Analyst, Accra.

The trend could also indicate investors’ expectation that the government will continue to roll over short-term debt to meet fiscal obligations, a situation that might pressure yields further in the coming months.

Inflation Decline and Economic Stability

Ghana’s inflation rate currently stands at 8%, its lowest in over four years, following consistent monetary tightening and coordinated fiscal measures.

At the 2025 PwC Cyber Forum, Vish Ashiagbor, Country Senior Partner at PwC Ghana, noted that the decline in inflation is a positive reflection of Ghana’s improving macroeconomic framework.

“The fact that inflation has fallen to 8 percent reflects a stronger macroeconomic framework. If we sustain this momentum and build private sector confidence, we could see a more stable price environment,”
— Vish Ashiagbor, PwC Ghana.

However, the undersubscription of government bills despite the inflation drop reveals that confidence in short-term instruments remains fragile, and liquidity may be tightening in key market segments.

Monetary Strength: Bank of Ghana’s Gold Reserve Growth

Adding a note of optimism, the Bank of Ghana’s gold reserves reached 38.04 tonnes as of October 31, 2025, marking a 35% increase from 28.1 tonnes a year earlier.

“This move should go a long way in helping to firmly stabilise the cedi,”
— Dr. Johnson Asiama, Governor, Bank of Ghana.

The steady accumulation of gold reserves has boosted investor confidence in Ghana’s long-term foreign reserve adequacy, though it has yet to fully ease concerns about short-term liquidity in domestic money markets.

Regulatory Reforms: SEC to Tackle Ponzi Schemes

The Securities and Exchange Commission (SEC) is tightening its regulatory grip on unlicensed online investment platforms that have defrauded thousands of Ghanaians.

At the second edition of its “Time With SEC” outreach in Koforidua, Director-General Dr. James Klutse Avedzi revealed that the Securities Industry Act is being overhauled to enhance enforcement powers and protect investors.

“We are working closely with the Ghana Police, EOCO, the Judiciary and the Attorney General’s Department to ensure that individuals and entities that defraud investors face the full consequences of the law,”
— Dr. James Klutse Avedzi, SEC Ghana.

The SEC plans to submit the revised bill to Parliament by the end of 2026, ushering in a new legal framework to strengthen Ghana’s capital market and restore investor trust.

SSNIT Pursues Strategic Investors for Struggling Hotels

Meanwhile, the Social Security and National Insurance Trust (SSNIT) is seeking strategic investors for three of its hotels — La Palm Royal Beach, Elmina Beach Resort, and Busua Beach Resort — which continue to underperform financially.

Director-General Kwesi Afreh Biney told Parliament’s Public Accounts Committee that SSNIT aims to revamp the properties through strategic partnerships while maintaining control over profitable ones such as Labadi Beach Hotel, which made over GH¢80 million in profits in 2024.

Deputy Finance Minister Thomas Ampem Nyarko assured the public that any future deals would be transparent and protect contributors’ interests.

Investor Confidence: Balancing Signals and Reality

The combination of declining inflation, rising yields, and fiscal undersubscription paints a complex picture of Ghana’s economic landscape.

While inflationary pressures are easing and external reserves are improving, investor appetite for government instruments appears to be waning, signaling concerns about short-term fiscal sustainability.

Economists suggest that to rebuild investor trust, the government must maintain discipline in expenditure, reduce borrowing costs, and expand domestic revenue mobilization through efficient tax systems.

“The market wants to see fiscal discipline, not just low inflation. Stability must be backed by credibility,”
— Dr. Efua Darkwa, Financial Economist.

Outlook

If inflation continues to decline and fiscal measures stabilize the market, Ghana could attract renewed domestic and foreign investment flows by early 2026.

However, persistent undersubscription in T-bill auctions may force the government to reassess its short-term borrowing strategy and consider alternative instruments or foreign inflows to close fiscal gaps.

The coming weeks will test Ghana’s ability to balance macroeconomic optimism with market confidence — a delicate dance between numbers and sentiment that will shape the trajectory of the economy into 2026.

Source: Accra Business News