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Government Borrows GH¢19.2 Billion Through Treasury Bills in May

Government borrowed more through treasury bills in May compared to April this year, but the rates continue the marginal but steady decline.

The government borrowed GH¢19.2 billion in May, marking a 45.4% increase compared to April. However, this figure is 13.5% lower than the GH¢22.2 billion borrowed in March, which also had five auctions.

Treasury bills have become a key borrowing tool for the government following the Domestic Debt Exchange Programme, which temporarily halted regular bond issuance and Eurobond borrowing. Investors currently earn between 25% and 27.9%, depending on the maturity date.

The May 31 auction saw a 29.5% oversubscription, with the government borrowing over GH¢3.5 billion against a target of GH¢2.7 billion. Following the oversubscription, interest rates on treasury bills experienced marginal reductions, with the 91-day bill at 25.03%, the 182-day bill at 26.91%, and the one-year note at 27.9%.

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Investors continue to prefer the 90-day bill despite its lower interest rate, reflecting decreased confidence in the long-term economy.

Treasury bill rates serve as benchmarks for deposit and loan interest rates, with changes influencing lending and deposit rates after a time lag. With a slight reduction in treasury bill rates and the Bank of Ghana’s Monetary Policy Rate steady at 29%, significant changes in loan interest rates are not expected in June.

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Meanwhile, the attractive returns on treasury bills, above 25%, offer better investments than the dollar, which has seen a 20% gain in the retail market and less than 15% on the inter-bank market. However, continued cedi depreciation could shift this advantage, a scenario the Central Bank aims to prevent.

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