In a continuation of the financial struggles, the Ghanaian government has once again missed its Treasury Bills target for the third time in a roll this year.
This under subscription reflects the growing hesitancy among investors to purchase short-term government debt, despite a slight reduction in interest rates.
The Treasury bills auction results, as reported by the Bank of Ghana, show that the government was only able to raise GH¢4.05 billion from the auction, falling short of its target of GH¢4.39 billion.
This shortfall of approximately GH¢340 million was exacerbated by the rejection of bids amounting to GH¢2.3 billion, underscoring the weak demand for government securities.
A closer look at the auction details reveals that the bulk of bids came from the 91-day Treasury bill.
A total of GH¢3.38 billion was tendered for the 91-day bill, representing about 83% of the total bids.
However, the government only accepted GH¢1.44 billion of these bids, showing that investor confidence remains low in the short-term instruments.
The 182-day bill saw a much smaller demand, with only GH¢501.17 million in bids, and the government accepted just GH¢81.09 million.
Similarly, the 364-day bill had a tender amount of GH¢176.26 million, with GH¢161 million of this amount being accepted by the government.
Interest rates on the Treasury bills continued their downward trajectory.
The yield on the 91-day bill fell by 7.0 basis points to 15.64%, while the 182-day bill saw a decline from 16.70% to 16.50%.
The yield on the 364-day bill also decreased marginally to 18.83%, further indicating a softening of demand for these government securities.
This marks the third consecutive Treasury bills auction where the government has failed to meet its target.
The trend raises concerns over the government’s ability to raise the necessary funds through domestic debt instruments amidst economic challenges.
These results are part of broader financial difficulties facing the country as it navigates a volatile economic environment.
Despite the interest rate reductions and efforts to improve investor sentiment, the government’s reliance on short-term borrowing has yet to bear fruit, with investor caution continuing to affect the outcomes of its debt issuance.
The government’s attempt to fill this funding gap also comes at a time when it is under pressure to meet its fiscal targets amid broader economic instability.
In the face of these challenges, the government’s response will be closely watched, especially as it continues to seek alternative means to boost investor confidence and raise funds for its projects.
-BY Daniel Bampoe
