BoG raises GHS 6.54 billion at 29.5% interest cost through bill issuance
The Bank of Ghana (BoG) recently raised GHS 6.54 billion through the issuance of its own bill, with a maturity period of 14 days. The bill was auctioned by the Central Bank on April 5, 2023, and was sold at an interest rate of 29.5%. This latest debt issuance by the BoG is aimed at managing the liquidity of the banking system through the sale of short-term securities on the primary market.
Central Bank bills are an important monetary policy tool that is used by central banks around the world to regulate the money supply. They are typically employed through open market operations (OMO), which involves the buying and selling of government securities in the open market. The main function of these bills is to manage the liquidity of the banking system by providing banks with short-term financing options, and by controlling the amount of money in circulation.
The interest rate on the BoG bills is the key interest rate that determines the monetary policy stance or rate in Ghana. The central bank uses this rate to influence borrowing and spending in the economy, and to control inflation. The bills typically have fixed maturities of 14, 28, 63, 91, and 182 days, and are issued to banks through regular auctions.
The recent auction of the BoG bill was met with significant demand from commercial banks, although the exact value of the bids made was not disclosed by the central bank. The proceeds from the auction will be used to loan funds to the government to meet its short-term financing needs, and to manage the liquidity of the banking system.
Overall, the issuance of the BoG bill is a significant development in the monetary policy landscape of Ghana. It demonstrates the central bank’s commitment to maintaining financial stability in the country, and its ability to manage the money supply through the use of effective monetary policy tools. As the economy of Ghana continues to grow and evolve, the role of the central bank in managing the money supply will only become more important, and the issuance of central bank bills will continue to play a key role in this process.
