The Ghanaian financial landscape under the Mahama administration has been characterized by a focus on managing existing debt rather than accumulating new liabilities. Finance Minister Cassiel Ato Forson has clarified the government’s borrowing position, stating that the net borrowing stands at GHS7.1 billion as of March 1st, 2025. Crucially, this amount isn’t representative of new spending but serves primarily as a financial buffer to address maturing debts inherited from the previous NPP/Akufo-Addo/Bawumia government. This strategy aims to ensure the smooth servicing of existing obligations and prevent any disruptions to the nation’s financial stability. The Mahama administration has prioritized responsible fiscal management, aiming to stabilize the economy and build a foundation for future growth by addressing the debt overhang.
The government’s approach to debt management is further illuminated by its handling of Treasury Bills (T-Bills). Since January 10, 2025, the government has received a substantial GHS89.7 billion in T-Bill bids. However, a significant portion of these bids, amounting to GHS30.2 billion, were rejected. Of the accepted bids, totaling GHS59.5 billion, the majority represent rollovers of existing debt. This selective acceptance of T-Bill bids underscores the government’s commitment to minimizing new borrowing and prioritizing the management of pre-existing obligations. The rejection of a significant portion of bids indicates a disciplined approach to controlling the debt burden, preventing it from spiraling out of control.
Finance Minister Forson has emphasized that the actual debt accumulation under the current Mahama administration is “virtually zero.” This assertion highlights the government’s fiscal prudence and commitment to avoiding further indebtedness. By focusing on managing existing debt rather than incurring new liabilities, the administration aims to create a more sustainable fiscal environment. This approach signifies a departure from previous practices and signals a commitment to responsible financial management. The emphasis on zero net debt accumulation indicates a clear policy direction towards fiscal consolidation and long-term economic stability.
The government’s prudent debt management strategy has yielded positive results, particularly in the reduction of the 91-day T-Bill rate. In just 50 days, the rate has fallen from 28.34% to 20.79%. This significant decrease reflects growing investor confidence in the Ghanaian economy and the government’s ability to manage its finances effectively. The lower T-Bill rate signals a reduced risk perception associated with lending to the Ghanaian government, indicating increased trust in the country’s economic trajectory under the current administration.
The decline in the T-Bill rate is interpreted as a positive indicator of the market’s perception of the government’s financial management. This improved investor confidence can have a ripple effect on the broader economy, potentially attracting more foreign investment and lowering borrowing costs for businesses. The lower rates can also free up government resources, allowing for greater investment in critical sectors such as infrastructure, education, and healthcare.
The Mahama administration’s focus on prudent debt management, illustrated by the minimal new borrowing, the strategic handling of T-Bill bids, and the resulting decline in the T-Bill rate, signals a commitment to fiscal responsibility and long-term economic stability. This approach aims to address the inherited debt burden while fostering an environment conducive to economic growth and investor confidence. The government’s actions represent a concerted effort to create a more sustainable fiscal future for Ghana.
