For the first time in several months, the Government of Ghana has accepted all bids submitted by investors in its latest Treasury bill auction, a rare occurrence that has sparked a debate about the state of government finances and liquidity pressures.
According to the auction results published by the Bank of Ghana, every pesewa tendered by investors across the 91, 182, and 364 days maturities was taken up by the government.
This is an unusual move as the trend shows that even if the government fails to meet its planned targets, some of the bids are rejected, indicating the state is not under any pressure. This gives room for the government to reject any investor bid with a high interest rate.
The unusual move recorded in the latest auction, some market watchers say, points to a growing appetite for funds, possibly driven by rising short-term financing needs.
Financial analyst Mac Jordan Nartey, a Senior Research Analyst at Laurus Africa Securities, believes the move is revealing.
In simple terms, accepting all bids means the government took whatever investors were willing to offer, regardless of pricing variations, suggesting a stronger-than-usual demand for liquidity.
“What we also noted about last week’s auction is that all bids were sold out, and also when you check the bidding range across all tenures, the upper band has increased. What this signals to the market is that the government’s appetite for money market funds has actually firmed up, and that will present upside risk.,” the analyst remarked.
MacJordan Nartey added that the development comes at a time when Treasury bill rates are losing their shine compared to other investment options. Treasury bill rates are significantly below their competitor securities on the market.
Interbank rates are moving around 21%, and the monetary policy rate is also around similar levels. So really, those are the factors driving interest away from Treasury bill assets now, hence the consistent oversubscriptions.
The government’s full acceptance of bids might not just be a strategy to meet short-term obligations; it could reflect deeper financing pressures amid limited revenue inflows and rising expenditure commitments.
The analyst warns that if this “firming up” of government demand continues, it could present upside risks that could push yields back up in the coming weeks. Higher yields mean the government must pay more to borrow, which could further strain fiscal space already stretched by debt servicing costs and wage commitments.
On the other hand, increased government borrowing from the money market could crowd out private sector credit, making it difficult for businesses to access affordable loans to expand operations, especially small and medium enterprises (SMEs) that rely on short-term bank financing.
While accepting all bids may temporarily ease the government’s cash flow challenges, the underlying issue remains: How long can this be sustained without worsening the cost of borrowing or disrupting market stability?
