Gov’t exceeds T-Bills target by GHS 1bn
The Bank of Ghana (BoG) recently auctioned 91 and 182 day treasury bills on behalf of the government, raising a total of GHS 2,758 million in credit from investors.
This figure exceeded the planned auction target of GHS 1,708 million by a significant GHS 1,050 million, indicating strong demand for government debt securities.
However, the higher-than-planned credit came at an increased cost to the government, with interest rates on the 91 and 182 day T-Bills coming in at 35.8% each.
Despite these increased interest rates, they remain lower than the country’s inflation rate, which currently stands at 53.1%.
This suggests that returns on government short term debt securities are still negative, meaning that investors are effectively losing money in real terms.
Looking ahead, the government aims to raise GHS 2,885 million in its next auction by issuing 91, 182, and 364 day T-Bills.
This ambitious target indicates a continued desire to raise funds from the debt markets, potentially to finance various government initiatives and projects.
These developments in Ghana’s debt market reflect a broader trend across the continent, with many African countries turning to domestic markets to raise funds amid the economic challenges posed by the COVID-19 pandemic, Russia-Ukraine war and the shutout from the international debt markets.
While this strategy can provide much-needed funds for development, it also carries risks, particularly if borrowing costs rise or if the funds raised are not invested effectively to promote sustainable economic growth.
As such, it will be important for governments across the region to balance their borrowing needs with the long-term economic sustainability of their countries.
