For the sixth consecutive week, the government has fallen short of its borrowing target during the latest treasury bill auction. It aimed to raise GH¢4.968 billion but narrowly missed the mark by 6.9%, securing GH¢4.624 billion.
The government typically borrows large amounts to refinance maturing treasury bills. However, the consistent heavy borrowing over the past six to eight weeks suggests increased spending in the second half of the year, especially as the December elections approach. This trend could negatively impact the private sector, as banks may prefer lending to the government rather than providing capital to private businesses that need it for expansion.
With international markets largely inaccessible, the government has been forced to rely heavily on treasury bills to finance its programmes. Other potential sources of funding, such as bilateral and multilateral lenders, have become less generous due to Ghana’s recent debt default and ongoing restructuring.
Interest rate movements on the bills were mixed. The yield on the 91-day bill slightly increased from 24.82% to 24.83%, while the 182-day bill saw a marginal decrease from 26.76% to 26.74%. The one-year note remained steady at 27.85%.
Investor interest in the 91-day bill remained strong, accounting for about 73% of the total amount raised. In contrast, the one-year note represented only 5.7% of the total, consistent with the trend since Ghana’s debt crisis began. With the inflation rate dropping to 20.9% in July, the real return on the various bills has improved, offering investors between 4.83% and 7.85% in real returns.
