GHS 4.9bn T-Bill Savings Mask Fiscal Stress – IERPP’s Prof. Boadi
The Institute of Economic Research and Public Policy (IERPP) has cautioned against the government’s celebration of falling interest payments in the 2025 Mid-Year Fiscal Policy Review, describing it as a misleading signal of progress. According to the institute, the reported GH¢4.9 billion savings from declining Treasury bill (T-bill) rates is not evidence of effective debt management but a clear symptom of deeper fiscal stress.
Addressing a press conference at the Ghana International Press Centre in Accra on Wednesday, July 30, 2025, Prof. Isaac Boadi, Executive Director of IERPP and Dean of the Faculty of Accounting and Finance at the University of Professional Studies, Accra (UPSA), dissected what he described as the “fiscal stress behind the numbers.”
“Falling T-bill rates saved GHS 4.9 billion in interest, but it’s not sound debt management, it’s fiscal stress in disguise,” Prof. Boadi added.
The government’s Mid-Year Fiscal Review, presented to Parliament on July 24, reported GH¢25.4 billion in interest payments, GH¢5.1 billion less than the budgeted GH¢30.5 billion. Of this reduction, GH¢4.3 billion was attributed to lower domestic interest costs, largely driven by a dramatic drop in T-bill rates. The 91-day T-bill rate, for instance, fell from 27.7% in December 2024 to 14.7% by June 2025.
While this decline might appear beneficial on the surface, Prof. Boadi explained that the real cause is far from reassuring.
“The fall in rates is not due to disciplined fiscal planning or market confidence. It reflects weak private sector credit demand and heightened investor risk aversion—both warning signs of a strained economy,” he noted.
Caution on T-bills falling
He further warned that the government’s increasing reliance on short-term, low-yield instruments like T-bills, instead of long-term bonds, signals a limited borrowing capacity and shrinking investor confidence in Ghana’s economic outlook.
“Rather than a sign of policy success, it reveals a government forced into short-term borrowing because of skepticism about long-term stability. This strategy worsens refinancing risks and keeps the country exposed to fiscal shocks,” Prof. Boadi explained.
The IERPP’s analysis went beyond interest payments to examine broader budgetary trends that point to underlying fiscal distress. These include the underperformance of grants, delayed oil receipts, persistent arrears, and rising contingent liabilities.
Prof. Boadi also drew attention to spending inefficiencies in public institutions, citing the Office of the Special Prosecutor as a striking example. Though allocated GH¢146.75 million in the 2025 budget, the office had recovered only GH¢306,000 by mid-year.
“This points to a worrying cost-inefficiency in public spending—one that cannot be overlooked when assessing the government’s true fiscal posture,” he said.
Unmasking vulnerabilities
According to the IERPP boss, the government must be honest about the real drivers behind the budget figures and stop masking vulnerabilities with cosmetic wins. While lower interest payments reduce short-term fiscal pressure, they do not reflect lasting structural reforms.
“The 2025 Mid-Year Budget paints a hopeful picture, but beneath the surface, fiscal stress not reform is driving the numbers. Ghana must move beyond short-term optics to tackle its deep-rooted economic imbalances,” Prof. Boadi stressed.
He further urged policymakers to address the structural flaws in public finance, rebuild investor confidence, and restore budgetary credibility by aligning stated fiscal objectives with transparent and sustainable execution.
