The government has again recorded another impressive performance on the short-term instruments market significantly exceeding its target for last week.
The government exceeded its treasury bill borrowing target last week by 36% marking the third consecutive week streak of significant performance on the short-term instruments market after the swearing-in.
The latest auction results from the Bank of Ghana report that the government planned to borrow a total of GH¢ 6 billion last week. After the auction, it accrued a total of GH¢ 8.2 billion exceeding the target by GH¢ 2.2 billion. This represents a 36% oversubscription.
The consecutive oversubscriptions since the new government was sworn in mark a consistent improvement in investor confidence.
The conventional trend continued as the majority of the bills came from the 91-day bill accruing a total of GH¢ 5.5 billion representing 55%. This was followed by the 364-day bill accruing GH¢ 1.9 billion marking 24% of the total bills. The 182-day instrument accrued the least with GH¢ 1.8 billion representing 21%.
This oversubscription, of the t-bills, also came at the expense of another hike in interest rates. The rate on the 91-day instrument increased from 28.417% to 28.515%. The 182-day bill also recorded an increase from 28.971% to 29.066% while the 364-day bill also saw a jump from 30.287% to 30.408%.
The 36% oversubscription marks a sustained investor rebound for over a five-week period spanning before the swearing-in. Amidst the oversubscriptions, analysts are raising concerns about the possible impact of the consistent hike in interest rates on the country’s debt burden.
The continuous rise in interest rates aside from worsening the country’s debt overhang, is a threat to the private sector development. This, economists explain as “crowding-out effect” where the private sector does not have access to affordable funding since creditors choose to lend to the government instead of businesses.
Meanwhile, the government plans to raise another GH₵ 6.5 billion this week through the auction of additional t-bills in Ghana.
