Government’s efforts to bolster short-term liquidity in the third quarter of 2024 have been largely disappointing, meeting auction targets on only two occasions out of 13 weeks.

After enduring a nine-week undersubscription streak from July 12 to September 6, the government saw a modest rebound in auction tender 1920 on September 13, achieving a 2.4% oversubscription. However, this brief respite was short-lived, with the next two auctions falling significantly short of targets, raising only 74.72% and 64.10% of the amounts sought.

In the latest auction, 1922, held on September 27, the government aimed to raise GH¢7.438 billion. While it accepted all bids totaling GH¢4.767 billion—comprising GH¢2.598 billion, GH¢830.28 million, and GH¢1.338 billion in 91, 182, and 364-day bills respectively—this still represented a shortfall of over 35% of its target.

This shortfall occurred despite a rise in interest rates. The average yields on the 91 and 364-day bills increased by approximately 60 basis points, moving from 25.0104% and 28.0789% in auction 1912 to 25.6439% and 28.6785% in auction 1922. This marks a stark contrast to the nearly 20 basis point increase observed during the first 12 auctions of the quarter.

The 182-day bills also saw a modest uptick in rates, rising from 26.8151% in auction 1921 to 26.9248% in auction 1922.

Overall, the government recorded a treasury bill shortfall of GH¢20 billion for Q3, having raised GH¢58.35 billion across the 13 weeks. For the period from July to September 2024, the government had set a target of GH¢78.44164 billion, with GH¢53.80767 billion allocated for rolling over short-term maturities and GH¢24.63397 billion earmarked for new issuances.

While the government appears able to meet short-term rollover needs, it will need to identify alternative funding sources to fulfill its financing requirements in the coming months.