The government’s treasury bills target of ¢2.63 billion saw an oversubscription of about 6.4%, indicating strong investor demand.
However, this increase in demand comes with a growing concern over the rising cost of borrowing.
The Bank of Ghana’s figures reveal that interest rates have been consistently rising for the past eight weeks, raising questions about the government’s debt management strategy aimed at reducing Ghana’s overall debt.
Since the beginning of 2023, the government has heavily relied on borrowing from the money market, which has resulted in higher borrowing costs.
This market has become the sole source of borrowing for the government, further contributing to the increased costs.
The rising interest rates are expected to lead to higher domestic interest payments for the government, posing challenges to its financial management.
According to the Bank of Ghana’s data, the yield on the 91-day treasury bill rose by 0.11% to reach 21.26%.
The yield on the 182-day bill also experienced a slight increase to 23.95% from the previous week’s 23.93%. The one-year bill had a higher rate of 27.82%.
These rising rates reflect the market conditions and the increased cost of borrowing for the government.
Despite the concerns over rising costs, the government managed to raise about ¢2.80 billion from the sale of short-term instruments. The 91-day bill received tenders of a little above ¢1.50 billion, and all of them were accepted.
Similarly, all bids totaling approximately ¢982 million for the 6-month bill were accepted. The government also accepted the ¢308 million tendered for the one-year bill.
Source: Ghana Business