In a bid to meet its borrowing target of GH¢4.36 billion, the government offered a slight increase in interest rates on all three treasury instruments. Despite the rate adjustments, the government missed its target by 12.8%, securing only GH¢3.8 billion. This shortfall continues the trend of recent under-subscription in treasury bill auctions.
The 91-day treasury bill rate increased marginally to 24.82% from 24.78%, while the 182-day bill rose to 26.76% from 26.74%. The one-year note remained largely unchanged at about 27.85%.
Interestingly, the 182-day bill recorded a higher-than-usual subscription rate, accounting for 30.7% of the total amount raised, a significant increase from its typical contribution of below 20%. This shift led to a decrease in the percentage contribution of the 91-day bills, which fell to about 63% from nearly 80%, that it usually posts.
The increased interest in the 182-day bills suggests that investors are becoming more willing to take a chance on slightly longer-term instruments. However, the one-year note saw a return to its usual low patronage, accounting for just 6.3% of the total amount raised after showing stronger performance the previous week.
The ongoing trend of under-subscription in treasury bills is likely to impact interest rates. The government may be compelled to maintain high rates to attract the necessary funds for its borrowing needs. Without the option of issuing new bonds, the government relies heavily on treasury bills to mobilize regular funding for its programmes. As a result, there is pressure to keep treasury bills attractive to prevent investors from shifting their investments to foreign currencies, such as the dollar, as a store of value.
The government’s challenge in meeting its borrowing targets highlights broader economic pressures, including the need to balance domestic funding requirements with efforts to stabilize the currency and manage inflation. Maintaining investor confidence in treasury bills will be crucial as the government navigates these challenges.
