Fitch Ratings: Treasury Bills unlikely to feature in Ghana’s near-term domestic debt restructuring
Fitch Ratings has indicated its skepticism regarding the inclusion of Treasury bills (T-bills) in Ghana’s Domestic Debt Exchange Programme.
The rationale behind Fitch’s stance lies in the delicate balance between high yields on short-term securities and the indispensable role that T-bills play in sustaining Ghana’s fiscal stability.
Toby Illes, Senior Director of Emerging Market and African Sovereign Ratings at Fitch Ratings, articulated this perspective during the “Reform and New Challenges in Western Africa” Africa Webinar Series.
According to Mr. Illes, the Government is unlikely to embark on the restructuring of T-bills, given their critical significance as a financial instrument for state financing.
“It would be suicidal,” warns Mr. Illes, emphasizing the perilous consequences of including T-bills in any domestic debt overhaul. T-bills, known for their lucrative returns within short timeframes, are indeed the last bastion of financial recourse for Government.
“We don’t expect T-bills to be restructured. Just given the need for that financing tool, we wouldn’t expect that to be included”.
“In Ghana’s case, it is generally very complicated to include that in domestic debt restructuring. I guess the main question is that domestic debt restructuring we would have now is about that the domestic debt restructuring is more about medium term when actually you move a lot of these maturities down the line”, he said.
He however expressed worry about the huge domestic debt servicing expected in the years 2027 and 2028 respectively.
“The policy adjustment from now till then is a downward trend. However, as I said when we get to 2027-2028 we would have a huge hung of domestic debt service.”
Fitch Ratings’ perspective on the role of T-bills in Ghana’s debt dynamics reflects the delicate equilibrium between short-term financial pragmatism and long-term fiscal sustainability.
