The Bank of Ghana (BoG) has said the 91-day Treasury bill rate for the month of June 2020 has declined to about 14.0 percent from the 14.8 percent recorded a year ago in 2019.
According to the Governor of the Bank of Ghana, Dr Ernest Addision, the interest rate on the 182-day instrument also declined to 14.1 percent from 15.2 percent for the period.
Speaking at the 95th meeting of the Monetary Policy Committee of the central bank on Monday July 26, Dr Addison said; “Rates on the 2-year, 3-year and 5-year instruments decreased marginally to 18.8 percent, 18.9 percent, and 19.3 percent respectively, from 19.8 percent, 19.7 percent, and 19.8 percent.”
He added; “Yields on the 6-year, 7-year, 10-year, and 15-year bonds remained unchanged at 21.0 percent, 16.3 percent, 19.8 percent, and 19.8 percent, respectively. Yield on the 20-year instrument has moved up from 20.3 percent from September 2019 to 21.5 percent in June 2020”
The Governor also noted, interest rates on the money market reflected downward trends at the short end and mixed trends at the medium to long-term segments of the market.
Treasury bills on the other hand, are risk-free investment that entail short-term loans that are guaranteed by the government and used to finance various of its operations. It also offers a benchmark for determining the value of any investment and is cited as one of the most secure and popular investment options in Ghana.
The maturity of treasury bills spans through a 91-day and a 365-day period with each of them offering different returns on investments.
For the central bank’s meeting, the Monetary Policy Committee maintained the policy rate at 14.5 percent, citing the need for macroeconomic stability amid the disruption caused by the coronavirus pandemic.
“The Committee was of the view that the current extraordinary circumstances, with a widened budget deficit and a residual financing gap, would require some monetary restraint to preserve the anchors of macroeconomic stability. In the circumstances, the Committee decided to maintain the policy rate at 14.5 percent,” the Governor explained.