With significant financial machinations, the Ghanaian government borrowed GH¢15.60 billion through treasury bills in April 2024, a 21.61% decrease over the same month the previous year, March 2023. In the midst of continuous attempts to control yields and handle economic pressures, this borrowing has occurred.
Government auctions underperformed slightly this month, missing their goals in four of the five events. This underachievement was defined as a 9.73% shortfall below the gross monthly target and a 3.90% shortfall below the amount required to pay obligations that have matured. Notwithstanding these obstacles, the goal of lowering Treasury bill yields was upheld throughout the month.
Treasury bill rates showed notable changes in April. The yield on the 91-day Treasury bill closed at 25.55%, down 45 basis points from the previous day. Longer duration yields, namely the 182-day and 364-day bills, also experienced significant drops, finishing at 27.65% and 28.25%, respectively, after losing 85 basis points apiece. These cuts are the result of the Treasury’s deliberate efforts to lower borrowing costs while navigating through unpredictable economic times.
Treasury yields have decreased as inflationary pressures have increased, mainly due to recent increases in ex-pump gasoline and transportation costs. Despite the increased pressure on inflation caused by these causes, experts are cautiously optimistic. They believe that more favorable conditions in the Treasury market may eventually be supported by the broader inflation forecast, possibly stabilizing or even further lowering yields.
Moreover, the oversubscription in the money market auction during the final week of April 2024 demonstrated strong interest in Ghana’s Treasury Bills. Bids were received from investors that not only exceeded the Treasury’s aim but also far outpaced the value of the matured bills. The treasury approved all offers for GH¢3.47 billion, which was 26.74% more than the matured notes and 17.07% more above the auction target. Despite the wider economic difficulties, investors’ confidence in the government’s debt instruments is reflected in this solid demand, which is encouraging.
In these bids, yields persisted in their downward trajectory, with the 91-day yield closing at 25.45% after falling by 10 basis points. This ongoing decline in yields suggests a persistent attempt to make government debt more attractive and manageable in terms of interest costs, which is crucial for maintaining fiscal sustainability.
