Ghana's 91-Day Bill Rate to Fall on Cost-Cutting, Databank, Gold Coast Say

Ghana’s 91-day treasury-bill rate is poised to drop to the lowest since April 2008 by year-end as the nation reins in public borrowing to cut debt-servicing costs, Databank Financial Services and Gold Coast Securities Ltd. said.

The 91-day bill rate is forecast to fall to 12 percent at the last auction of this year from 12.3 percent at its most recent sale on Nov. 19, Sampson Akligoh, an economic analyst with Accra-based Databank, said in a phone interview today. That’s the lowest since April 2008, according to data compiled by Bloomberg. Collins Appiah, head of research at Accra-based Gold Coast Securities also expects the rate to drop close to 12 percent, he said by phone today.

Ghana will use revenue from oil production that starts next month at the Jubilee field to cut the budget gap by more than two-thirds to 3 percent of gross domestic product by 2013, after missing the deficit target in its first two years in office, according to its budget delivered last month. Yields have dropped from a peak of 25.9 percent in July last year as inflation slowed in 14 of the 15 months through September. Inflation was unchanged at 9.38 percent in October from the previous month.

“What happens at auction nowadays is that government sells bills only up to the point where the bid rates are favorable to it, cutting off the rest,” Akligoh said. “Without an eye on costs, government could have accepted all the bids and end up selling more than it even sought to raise,” Akligoh said.

Appiah expects Bank of Ghana to keep its benchmark rate unchanged at 13.5 percent at its Dec. 6 meeting. The last reduction was 1.5 percentage points in July and the bank has cut its key interest rate by 4.5 percentage points this year.

“We expect inflation to close the year at 9.5 percent, which is too low to signal interest rates to rise,” he said in a phone interview.

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