The government fell short of its treasury bill target of GH₵5.310 billion, raising only GH₵3.86 billion, representing a 27% shortfall. This shortfall highlights the ongoing challenge the government faces in meeting its borrowing targets, especially when aiming to raise close to GH₵5 billion.
The lower-than-expected amount raised prevented the government from reducing interest rates on all instruments. The rate on the 91-day bill remained at 24.78%, while the 182-day bills saw a marginal reduction to 26.71%, a drop of only 3 basis points.
Conversely, the one-year note saw a slight increase of just 2 basis points but remained unattractive, accounting for only 6.7% of the total amount raised. The 91-day bill continued to be the most patronised, contributing about 75% of the total borrowed amount.
With no significant reductions in treasury bill interest rates, substantial changes in the Monetary Policy rate are unlikely when the committee meets from Tuesday, July 23, to Friday, July 26, to review economic developments.
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Although inflation has continued to decline to 22.8%, suggesting a potential downward review of the policy rate, the month-on-month inflation remains significantly high at 2.9%. Additionally, the International Monetary Fund (IMF) has called for the Central Bank to maintain a tightened monetary policy stance.
Consequently, the committee may opt to keep the rate at 29% after its three-day deliberations. This decision is further influenced by the recent marginal but noticeable depreciation of the cedi, which began in the latter part of last week due to insufficient dollar supply.
The government’s ongoing struggle to meet its treasury bill targets underscores broader fiscal challenges, including the balancing act between stimulating economic growth and maintaining financial stability. The persistent shortfalls and high-interest rates on treasury bills highlight the difficulty in managing public debt and financing needs amidst external economic pressures and internal financial constraints.
