In its last treasury bill auction, the government set an ambitious borrowing target of GH¢6.558 billion but fell short by 19.1%, raising GH¢5.3 billion. This marks the fifth consecutive week the government has missed its borrowing goal, a situation that occurs when it aims to secure over GH¢5 billion.
The government typically borrows large sums to pay off maturing treasury bills. With interest rates on government instruments experiencing a slight decline compared to previous two quarters, borrowing to refinance maturing bills could result in savings for the government. Interest rates remained steady at 24.82% for the 91-day bill, 26.76% for the 182-day bill, and 27.85% for the one-year note.
The 91-day bill was the most popular among investors, accounting for 77.4% of the total amount raised, reflecting a preference for shorter-term investments. In contrast, the one-year note saw low patronage, making up only 4.4% of the total, while the 182-day bill accounted for 18.2%.
With limited access to international markets, the government is increasingly relying on treasury bills to meet its funding needs. However, this approach has economic implications, as borrowing short-term to finance medium- to long-term projects creates a mismatch that adds financial strain. Additionally, heavy borrowing by the government reduces the availability of loans for the private sector, as banks prefer the safety of treasury bills over lending to private businesses.
The government plans to borrow a total of GH¢78.441 billion through treasury bills in the third quarter of 2024, with GH¢53.807 billion earmarked for rolling over short-term maturities and GH¢24.633 billion allocated for fresh financing requirements.
