Government Secures 13.6% Oversubscription on Treasury Bills But Borrowing Costs Edge Higher

Ghana’s government has achieved a 13.61 percent oversubscription of its treasury bills auction for the second consecutive week, signalling continued investor appetite for short-term government securities — though at a cost that may give fiscal planners pause.

According to auction results published by the Bank of Ghana, the government received bids totalling GH₢8.43 billion against a target of GH₢7.42 billion, ultimately accepting GH₢8.29 billion of the tenders. The oversubscription, while welcome, came alongside rising interest rates across much of the yield curve — a development that will increase the government’s debt servicing burden.

The 91-day bill remained the most sought-after instrument, attracting GH₢6.03 billion in bids — representing 71.5 percent of total tenders. All bids for the shortest-dated security were accepted. The 182-day bill recorded bids of approximately GH₢1.10 billion, with just over GH₢1.04 billion accepted, while the 364-day bill attracted GH₢1.29 billion in tenders, of which slightly more than GH₢1.04 billion were accepted.

The yield on the 91-day bill climbed by 3.0 basis points to 5.04 percent, marking a continued upward trend for the benchmark short-term rate. The 182-day bill offered some relief, with its yield dipping marginally to 7.08 percent from 7.09 percent the previous week. However, the 364-day bill saw the most significant movement, with its yield surging by 14.0 basis points to 10.97 percent — a notable jump that reflects growing investor concerns about longer-term fiscal sustainability.

The mixed performance across the yield curve suggests that while investors remain willing to lend to the government in the short term, they are demanding higher compensation for locking in funds over longer periods. This is a pattern that has repeated itself in recent months, with the government consistently meeting or exceeding its T-bill targets while facing upward pressure on borrowing costs.

For Ghana’s fiscal managers, the rising cost of short-term borrowing presents a delicate balancing act. Treasury bills remain the government’s primary instrument for raising domestic funds, and persistent oversubscription indicates healthy demand. Yet the creeping yields mean that each successive auction adds incrementally to the debt service bill — a concern at a time when the government is working to maintain fiscal discipline under its post-debt-restructuring commitments.

The auction results come against a backdrop of broader economic uncertainty, with inflation dynamics, currency pressures, and global monetary policy shifts all influencing investor appetite. How the government navigates the tension between meeting its borrowing needs and containing costs will be a key test of fiscal management in the months ahead.

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