Government plans GHS 94.4 billion Treasury Bill borrowing next year amidst robust investor demand

In a strategic move to finance its expenditures, the government is set to borrow GHS 94.4 billion through treasury bills in 2024, earmarking GHS 31.8 billion as a buffer for potential auction shortfalls. Analysts predict a continuation of this strategy, emphasizing the government’s commitment to building a substantial financial cushion.

Investor participation in the T-Bills market in November 2023 exceeded expectations, with the government accepting GHS 15.3 billion, surpassing rollover obligations by an impressive 45.4% and outstripping the offer target by 26.5%. This heightened interest is reflected in the total bids submitted, reaching GHS 15.6 billion—a notable 14.9% increase month-on-month and surpassing the T-bill offer target by 29.0%.

The prevailing market conditions, marked by strengthened money market liquidity in November 2023, have led to heightened demand for weekly Bank of Ghana bills and T-bills. This increased interest is occurring against a backdrop of emerging downward pressure on yields, further underscoring the dynamic nature of the financial landscape.

Analysts point to a carefully considered investment strategy, with a focus on locking in the 364-day yield. This approach is justified by the anticipation of lower inflation and interest rates, offering a more favorable inflation-adjusted return over the holding period. The November 2023 success and robust investor demand indicate a strategic alignment between government objectives and market dynamics.

Looking ahead, the government faces a refinancing obligation of GHS 12.8 billion in December 2023—a notable 21.7% increase month-on-month. Managing this obligation will require prudent fiscal measures to navigate evolving market conditions and sustain the positive momentum observed in recent treasury bill auctions.