The government, for the second consecutive week, has missed its treasury bills borrowing target despite an increase in interest rates.
The government planned to borrow a total of GH₵ 6.89 billion. However, after the auction by the Bank of Ghana, the government was able to accrue GH₵6.41 billion missing the target by GH₵482.60 million representing a shortfall of 7%.
According to the Bank of Ghana (BoG) Auction results, all bids tendered were accepted. The majority of the total bids accepted came from the 91-Day Treasury Bill which accrued GH₵4.24 billion, followed by the 364-Day Bill accruing a total of GH₵1.32 billion. The 182-Day Bill only tendered GH₵843.99 million.
It is also interesting that the failure to meet the target came amidst an increase in interest rates which were expected to lure investors.
From the auction results, the yield on the 91-day bill was increased from 26.969 percent to 27.193%. The 182-Day Bill also recorded an increment in yield from 27.788 percent to 27.988 while the 364-Day Bill also increased to 29.825% from 29.218 percent.
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This increment is the fifth consecutive week the government has hiked interest rates on the bills to attract investors so as to meet its target.
This means that investors of these government instruments have been enjoying increasing yields on their investments.
However, analysts explain that the continuous hikes in the interest will increase the cost of debt servicing on these instruments hence risking a very high debt overhang. This means that more public funds will be allocated towards debt servicing when these instruments mature while critical services for ordinary Ghanaians will suffer.
Public funds for building roads, improving education, healthcare, infrastructure, and social protection will now compete with high debt servicing obligations which will affect the socio-economic development of Ghanaians.
Meanwhile, the government has targeted to borrow GH₵ 6.10 billion this week on the treasury bill market. This is a significant shortfall of the amount targeted to raise last week on the T-Bill market.
