The government in the issuance of its 91,182 and 364 days treasury bills missed its target of raising GH¢1.86bn.
The government in the auction of the short-term securities missed its target by some GH¢61m as it managed to raise GH¢1.80bn from the debt market.
Bids for the 91, 182 and 364 days T-Bills amounted to GH¢1,131 million, GH¢510 million and GH¢183 million respectively with government accepting bids amounting to GH¢1,131 million, GH¢494 million and GH¢183 million for the 91, 182 and 364 days T-Bills respectively.
The 91, 182 and 364 days T-Bills were auctioned at interest rates of 36%, 36.3% and 36.4% respectively.
This is the first time government has missed its auction target for the short-term debt instruments after securing a staff-level agreement (SLA) with the IMF.
Prior to that, the government had for six weeks running, exceeded its auction targets.
The first time was six weeks ago when Government exceeded its target by GH¢487m mobilising some GH¢1.65bn in total bids.
The second was five weeks ago when Government mobilised funds in excess of GH¢2.39bn against a target of GH¢2.17bn.
The third was four weeks when Government exceeded its target by GHS 896m mobilising some GH¢2,748 million in total bids.
Government, in its next auction – January 6 – is aiming at raising some GH¢1,492 million from the issuance of the 91 and 182 day bills.
Financial sector to collapse if Gov’t adds T-bills to debt exchange programme
In a related development, Professor Godfred Bokpin is warning of the collapse of the financial sector if government includes Treasury bills in the debt exchange programme.
He, however, does not expect the government to rope in Treasury bills into the debt exchange programme because that is its only source of borrowing.
Speaking in an interview on Joy FM, Professor Bokpin expressed unhappiness about the inclusion of individual bondholders in the debt exchange programme, describing the move as a wholesale approach.
“If you look at the financing landscape right now, that [T-bills] is the only means government has kept to sustaining itself. So I am not expecting that government will make any announcement of roping in treasury bills.
“What it means is that the regime will collapse because that is the only source of funding apart from the Bank of Ghana sustaining government on its balance sheet.”
“But the way things are going, it is very difficult to trust the government and their statement, that’s unfortunate. But for now, government will keep the window open as a way of interacting with the market”, he stated.
He added that if care is not taken the balance sheet of the banks will weaken after the programme.
“From the approach, government has adopted and the terms, by the time we are done, if government is unwilling to accommodate further revision to the terms of the domestic debt, we will systematically weaken the balance sheet of the participating financial institutions”.
“Without even introducing the debt exchange, if you do mark-to-market, government financial instrument is manifesting explicitly in income losses. And some banks may be asked to bring in additional capital or they will have to be recapitalised. If you assess the banks’ balance sheet today under IFRS 9, a number of banks will go underwater [collapse],” he remarked.