Finance Minister Mohammed Amin Adam has urged the Office of the District Assemblies Common Fund (DACF) to promptly transfer the allocated GH¢181,837,022.00 to the beneficiaries of the DACF-Responsiveness Factor Grant (RFG) for the District Performance Assessment Tool (DPAT) VI.

He expressed concern that the ongoing delays in transferring the funds to the Metropolitan Municipal District Assemblies (MMDAs) could undermine the government’s commitment to bilateral cooperation agreements and pose a significant risk to the Ministry’s objective of mobilising resources to support local development through decentralisation.

In a statement dated February 27, 2024, Mr Adam emphasised the importance of these potential grant funds as the country navigates an International Monetary Fund (IMF) programme of fiscal consolidation and economic recovery.

Mr Adam clarified that the Ministry received a letter dated December 12, 2023, from the Ministry of Local Government, Decentralisation and Rural Development (MLGDRD), requesting the DACF Office to transfer GH¢181,837,022.00; GH¢170,142,722.00 to the Sub-consolidated accounts of the MMDAs and GH¢11,694,300 to the DPAT Secretariat for DPAT VI activities.

He expressed concern that these funds have not yet been received by the beneficiaries, hindering the progress and effective operations of the MMDAs.

Mr Adam stated that the prerequisite for Development Partners (DPs) committing funds to the DACF-RFG was the transfer of funds intended for the previous DPAT cycle (both GoG and DP contributions) to the MMDAs for their planned activities.

He noted that the ministry had received concerns from its development partners about the delayed transfer of funds to MMDAs, which threatens current and future DP support to the DACF-RFG.

For instance, the Finance Minister pointed out that the Swiss Government was hesitant to execute a new grant financing agreement of CHF22million, including CHF6million for DPAT VII activities in 2024, because the CHF4million disbursed in December 2022, along with the corresponding Government of Ghana (GoG) contribution for DPAT VI activities in 2023, had not been transferred to the MMDAs.

READ THE FULL STATEMENT FROM THE MoF HERE

Interest rates fell for 10 consecutive weeks, as demand for treasury bills continued to remain high despite the upside risks.

As predicted by many analysts, interest rates plummeted to reflect the lower inflation.

The yield on the 91-day bill fell by 25 basis points to 26.74%.

That of the 182-day also eased to 29.24% from 29.49% the previous week.

Similarly, the 364-day bill went down by 16 basis points to 29.84%.

Meanwhile, the government accepted all the bids tendered to the tune of GH¢4.83 billion. This is about 12% oversubscription.

For the 91-day bill, about GH¢2.72 billion were tendered, representing 56.3% of the total bids. The uptake was also GH¢2.72 billion.

For the 182-day bill, all the GH¢919.40 million of the bids were accepted.

The same applies to the 364-day bill in which all the GH¢1.18 billion were accepted.

Yields fell sharply in February 2024

Yields fell sharply in February 2024 as the strong money market liquidity outweighed any upside risk from the unexpected uptick in the January 2024 inflation.

The 91-day yield trimmed 131 basis points month-on-month to 27.3%.

The 182-day went down by 135 basis points to 29.8%, while the 364-day yield fell by 150 basis points to 30.3%.

Ratings agency, Fitch, expects treasury bill yields to decline in 2024 as the government progresses with the external debt restructuring, whilst the economy recovers.

However, it expects T-bill yields to remain high by historical standards.

Revealing this in its latest assessment of the Ghanaian economy, the UK-based firm said inflation was still elevated while the fundamentals of the economy is not strong.  

“We still expect treasury bill yields to remain high by historical standards”.

This is coming despite T-bills yields easing by over 2.0 percentage points since January 2024.

On the financial sector, Fitch said strong profitability of banks operating in Ghana will complement the capital-raising initiatives encouraged by the Bank of Ghana, which directed undercapitalised banks to present credible recapitalisation plans last year.

“We expect several banks to raise core capital from shareholders and to seek capital support from Ghana Financial Stability Fund”, it added.

The government has committed the local-currency equivalent of $500 million to the fund and the World Bank’s International Development Association has committed $250 million.

It further said that foreign-owned banks are generally best placed to deal with the difficult operating environment in Ghana as they can call on extraordinary support from their large shareholders.

Investors show immense interest in T-bills

Last week’s T-bill auction gained increased participation from investors, partly following the improved liquidity level from the payment of coupons on the new bonds.

Investors pushed through total bids valued at GH¢6.97 billion against the auction target of GH¢6.29 billion. The treasury accepted all bids.

There was a bigger decline in yields relative to the declines recorded in recent auctions, partly as investors bid lower yields on improved liquidity in the market.

The 91-day yield declined by 61 basis points to 27.28%, while the 182 and 364-day decreased by 65 basis points and 60 basis points to 29.75% and 30.30% respectively.