Debt Auction: BoG raises GHS 1.5bn at 22% interest rate on behalf of Gov’t
The Central Bank has raised some GHS 1.5 billion in debt from the issuance of its own bills.
The bills with a maturity period of 14 days was auctioned by the Central Bank on Wednesday, September 14, 2022.
Per the auction results released by the BoG, it is unclear the value of bids made by commercial banks, insurance firms and other institutional investors for the Central Bank bills as well as whether the BoG was able to meet its target with the auction of its bills as both amounts were not stated by the BoG.
The bills however, were auctioned at an interest rate of 22 percent.
Central Bank bills mostly employed through Open Market Operations (OMO), serves as a monetary policy tool used by Central Banks to regulate money supply.
The main function of Central Bank bills is to manage the liquidity of the banking system through selling short-term securities on the primary market.
Funds raised from the auction of the bills are usually loaned to the government to meet its short-term financing needs.
The interest rate on the Central Bank bills is the key interest rate that determines the monetary policy stance or rate.
With increased borrowings on the domestic debt market, the country’s public debt stock is expected to rise with domestic debt as a ratio of government’s total debt stock also expected to increase.
The country’s stock of public debt increased to 78.3 percent of GDP (GHS 393.4 billion) at the end of June 2022, compared with 76.6 percent of GDP (GHS 351.8 billion) at the end of December 2021.
Of the total debt stock, domestic debt was GHS 190.1 billion (37.8 percent of GDP), while the external debt was GHS 203.4 billion (40.5 percent of GDP).
Bog Auctresults 672 Wed 14 Sept 22 by Fuaad Dodoo on Scribd
