Interest rates on government borrowing instruments, such as the Treasury Bill, have been going down, signalling a good indication that interest rates charged by commercial banks on lending could also reduce. The benchmark 91-Day Treasury Bill has shed over 700 basis points since Oc1ober last year. It reduced from the region of 26 per cent in October to the present 17.17 per cent on February 22. Besides the Bank of Ghana policy rate, the prime rate, banks actually look at the Treasury bill as a real measure benchmark for adjusting their interest rates on lending. Treasury bills are instruments the government uses to borrow from the money market. They offer higher rates when they engage in high, consistent borrowing. This means that short-term investors turn to the government paper instead of the commercial banks and other investment houses to keep their money. As such, real interest rates of the banks tend to be higher when the Treasury bill roles are also high. Since the beginning of last year, the government has been borrowing more to finance domestic expenditure, arrears for completed and ongoing jobs and pay interest on loans that fall due. But the reduction in the rates means the government is now reducing its borrowing stance, having tackled most of the critical payment. The benchmark rate has therefore reduced from the region of 26 per cent in October 2009 to 25.59 per cent in the week ending November 17-23. The rate kept receding and eventually settled for 24.62 per cent in the week ending December 8-14 and 24.14 per cent the following week, while closing the year 2009 at about 23.5 per cent. Supported by declines in a month-to-month inflation which started dropping from last year's high of 20.56 per cent in April to the present 14.80 per cent at the end of January, the treasury rates are expected to fall further to the region of 15 per cent by the middle of this year, barring any major economic shocks, domestically or externally. Source: Graphic Business/Ghana