T-Bills Oversubscription: Gov’t continues to gulp more debt despite rising debt stock concerns
Government, continues to take on more debt from the domestic market in the form of treasury bill issuance despite rising concerns over the country’s public debt stock.
Ghana’s debt stock, according to Moody’s Investors Service, is projected to reach some 104% of Gross Domestic Product (GDP) by the end of the year – 2022.
The country’s rising debt stock which has been described as unsustainable coupled with rising interest payments which can no longer be adequately serviced with the country’s low tax revenues, has led the country to seek for a $3bn Balance of Payment support programme from the IMF.
The country’s high debt stock and challenge to adequately service its debts to creditors has resulted in several downgrades by rating agencies such as Moody’s, Fitch and S&P, which has further resulted in the country’s loss of market access to the international capital markets, major capital outflows from the economy, and a significant depreciation of the cedi.
Given the country’s dire current economic challenges and high debt stock, one would have thought the government would eased up a bit on its uptake of domestic debt.
But that seems not to be the case, as government in the issuance of the 91 day and 182 day treasury bill last week Friday, accepted bids more than the target it set for the short term securities.
Government, in the said T-Bill issuance (Tender 1819), set an auction target of GHS 1,176m which was oversubscribed by GHS 180m.
In the end, government mobilised some GHS 1,356m in fresh debt as against the initial target of GHS 1,176m.
The 91 day and 182 day treasury bills were issued at near-inflation interest rates of 31.2% and 32.1% respectively.
This coming Friday, October 14, government will once again, look to raising some GHS 1,088m in fresh debt from the issuance of the 91 day, 182 day and 364 day treasury bills, further compounding its debt challenges.
Recent data from the Bank of Ghana indicates that the country’s public debt has climbed to GHS 402bn from the previous GHS 393bn debt.
Auctresults-1819 by Fuaad Dodoo on Scribd
