In last week’s treasury bill auction, the Government of Ghana failed to meet its target despite accepting bids at higher rates. This marks the ninth consecutive week of undersubscription for treasury bills, continuing a trend of difficulties in raising short-term financing on the local market.

Out of the GH¢5.604 billion target set for Tender 1919, the government only raised GH¢4.849 billion, resulting in a subscription rate of 86.53%.

The government accepted all bids, which included GH¢3.903 billion in 91-day bills, GH¢748.58 million in 182-day bills, and GH¢197.11 million in 364-day bills.

The ongoing undersubscription has increased the cost of borrowing, with average interest rates for bids rising marginally. The 182-day bill rate saw a slight increase from 26.7890% to 26.7899%, while the 91-day and 364-day bills experienced more notable increases, from 24.8896% to 24.9013% and from 27.9100% to 27.9258%, respectively.

The rising borrowing costs over recent weeks are believed to be a response to a potential increase in the country’s inflation rate for the first time in four months. The Ghana Statistical Service is expected to announce the inflation figures later this week.

With a nine-week streak of undersubscription and only three more auctions remaining in the third quarter of the year, the government is significantly behind schedule in its goal to issue a gross amount of GH¢78.44164 billion for the period from July to September 2024.

While the GH¢53.80767 billion needed to rollover short-term maturities remains within reach, it seems unlikely that the government will secure the remaining GH¢24.63397 billion in new issuance needed to meet its financing requirements.

Below is a summary of the results of Tender 1919: