The government is projected to borrow approximately GH¢200 billion from the treasury market in 2025. This marks a decline compared to the 2024 estimate of GH¢220 billion, translating to an average weekly borrowing of GH¢3.9 billion in 2025, down from GH¢4.2 billion in 2024.
According to Databank Research, improving access to international funding and positive macroeconomic trends suggest the government may shift towards longer-term financing options. However, this transition is expected to occur after the first quarter of 2025, as the government’s treasury refinancing needs are likely to keep demand for short-term funding elevated. This will be driven by maturing obligations from the significant borrowing activity in the second half of 2024.
Fixed Income Market to Recover Strongly by Mid-2025
Databank Research also anticipates a strong rebound in the fixed income market by mid-2025, supported by easing inflation and policy measures aimed at compressing treasury bill yields.
Despite expectations of a more relaxed monetary policy and lower inflation in 2025, investor response to falling yields may be delayed until the middle of the year.
“We believe significant policy actions to lower sovereign borrowing costs will be pivotal in driving yield compression from the current high of 27% recorded in November 2024,” the report stated. Databank also highlighted that the government’s plans to reduce reliance on money market funding and potentially issue longer-term securities will further contribute to a decline in yields by mid-2025.
Reduced Demand for Money Market Funding
The report further noted that improved access to alternative funding sources is likely to reduce the Treasury’s dependence on short-term money market funding in 2025.
“We foresee a notable moderation in the Treasury’s demand for money market funding, supported by increased access to international funding and a shift towards long-term securities. This reduced demand is expected to provide the government with room to lower high treasury bill yields,” Databank added.
With these developments, 2025 is shaping up to be a year of transition for Ghana’s borrowing strategy, with a focus on long-term financing and reduced pressure on the money market.
SOURCE: JoyBusiness
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