Economist Dr. Priscilla Twumasi Baffour has raised concerns over the sharp decline in Treasury Bill (T-bill) rates in recent months, cautioning that if not properly managed, the trend could pose significant risks to the economy.
Since the beginning of the year, T-bill rates have dropped from over 20% to approximately 15%, reflecting improved investor confidence and government efforts to lower borrowing costs.
However, Dr. Twumasi Baffour warns that while the decline may ease the government’s debt burden, it could also lead to unintended consequences, including reduced investor appetite and liquidity challenges in the financial sector.
“A drastic reduction in Treasury Bill rates, if not carefully managed, could result in economic shocks. Lower yields may discourage investment in government securities, affecting the state’s ability to raise funds for key projects.
Additionally, financial institutions that rely on T-bills for returns may face liquidity constraints, which could impact credit availability in the private sector,” she explained.
She urged policymakers to adopt a balanced approach, ensuring that interest rates remain attractive to investors while maintaining fiscal stability.
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