The government raised interest rates on all treasury bills during the last auction, yet still missed its borrowing target for the eighth consecutive week. Despite aiming to raise a little over GH¢5 billion, the government only secured just over GH¢4 billion, falling short by 19.5%.
Since early August, the government has been aggressively borrowing but has consistently failed to meet its targets, suggesting that investors remain cautious about lending to the government. This caution persists despite assurances that treasury bills will not be included in the debt restructuring programme. The lack of investor confidence may reflect broader concerns about the performance of the economy.
In contrast to the recent trends of falling interest rates and a downward trend in inflation, rates on all instruments increased. The 91-day bill saw a rise from 24.78% to almost 24.89%, an increase of 11 basis points. Similarly, the 182-day bill increased from 26.68% to 26.78%, and the one-year note went up from 27.81% to 27.91%, both reflecting a 10 basis points increase.
The rise in interest rates indicates the government’s increased appetite for borrowing, raising concerns about a surge in government spending compared to the more controlled spending observed in the first half of the year.
Investor interest in the 91-day bill dropped to 61.8%, below the traditional 75%, as attention shifted to the 182-day bill, which offers a higher interest rate of 26.78%. The 182-day instrument accounted for 33.1% of the total amount raised, providing some relief for the government, as it has six months to repay this portion of the borrowing. The one-year note, however, saw the least patronage, accounting for only 5.1% of the total amount realized.
As the new month begins, market watchers will closely monitor government borrowing targets in the treasury bill market to see if August’s surge continues or eases.
