The Government of Ghana’s domestic borrowing programme has come under pressure after recording a second consecutive Treasury bill undersubscription.
The development heightens the financing challenges facing the government at a time when revenue performance remains tight.
At the latest auction, the government sought to raise GH¢5.892 billion but attracted bids worth only GH¢4.917 billion, resulting in an undersubscription of GH¢975.44 million, representing 16.55% below target. The Treasury accepted GH¢4.866 billion of the bids submitted, leaving a funding gap of GH¢1.026 billion against its original target.
The latest results as published by the Bank of Ghana mark a continuation of the reversal from the strong oversubscription trend that characterized much of the year and raises fresh questions about liquidity conditions and investor appetite in the domestic debt market.
According to the report, demand was largely concentrated at the short end of the yield curve. The 91-day bill attracted GH¢3.4 billion, accounting for the bulk of investor interest. The 182-day bill garnered GH¢749.67 million, while the 364-day instrument received GH¢797.98 million in bids.
Adding to the government’s challenges, yields moved higher across all tenors, suggesting investors are demanding slightly better returns before committing funds.
The rate on the 91-day bill rose from 4.9143% to 4.9901%, while the 182-day bill edged up from 7.0406% to 7.0434%. The 364-day bill also increased from 10.3716% to 10.4593%.
For the government, the development comes at an uncomfortable time. With revenues reportedly under pressure, weaker participation in the T-bill market means government has fewer domestic financing options available to support expenditure commitments, fund ongoing programmes and manage cash flow requirements.
The combination of lower-than-expected investor demand and rising yields presents a difficult balancing act. Government may be forced to either accept higher borrowing costs, adjust expenditure plans, or intensify efforts to improve revenue mobilisation to close emerging financing gaps.
While the latest auction does not signal a crisis, two consecutive undersubscriptions suggest that the easy liquidity conditions that previously supported aggressive government borrowing may be softening.
If the trend persists, it could place additional pressure on fiscal operations at a time when maintaining budget discipline remains critical.
