The Ghanaian government has missed its treasury bill (T-bill) target for the third consecutive time in 2025, signaling a potential shift in investor sentiment towards short-term government securities.

According to auction results published by the Bank of Ghana, the government was only able to raise GH¢4.05 billion from the sale of treasury bills, falling short of its intended target of GH¢4.39 billion.

This represents a 7.59% undersubscription, reflecting waning investor demand that contrasts with the consistent oversubscriptions seen in previous quarters. What further complicates the picture is the government’s decision to reject GH¢2.3 billion worth of bids, despite not meeting its target.

The 91-day bill continued to attract the highest volume of bids, totaling GH¢3.38 billion, which represented about 83% of the total bids received. Yet, the government accepted only GH¢1.44 billion of these bids. For the 182-day instrument, GH¢501.17 million was tendered, but only GH¢81.09 million was taken up. The 364-day bill received just over GH¢176 million in bids, with the government accepting GH¢161 million.

This selective acceptance pattern suggests that the government is being cautious about the interest rates it is willing to pay. However, this conservative stance may also be discouraging investors who are seeking better returns in a high-inflation environment.

Falling Yields Add to Investor Caution

Yields across all short-term maturities declined during the latest auction. The 91-day T-bill dropped by 7 basis points to 15.64%, while the 182-day bill fell to 16.50% from 16.70%. Similarly, the 364-day bill recorded a slight dip to 18.83%.

These declining yields reflect the government’s efforts to lower domestic borrowing costs. However, they also reduce the attractiveness of T-bills to investors who are looking for higher real returns, especially amid rising costs of living and macroeconomic uncertainties.

The government’s reliance on T-bills to meet its short-term financing obligations could face increasing pressure if undersubscriptions and bid rejections persist. A cooling interest in treasury bills raises red flags about the sustainability of the current borrowing strategy.

With investor interest declining and the government rejecting a significant volume of bids, there is a clear disconnect between the market’s expectations and the state’s borrowing terms. This gap could widen further if inflation remains high and alternative investment options offer more attractive returns.

Implications for Fiscal Policy

The persistent underperformance of T-bill auctions has implications for fiscal planning. Should the government continue to fall short in raising domestic funds, it may be forced to turn to alternative, and potentially more expensive, funding sources. This includes the possibility of returning to commercial loans or accelerating external borrowing—options that come with higher interest rates and increased exposure to exchange rate risks.

In the context of Ghana’s ongoing IMF programme and the broader push for fiscal consolidation, the government may find itself caught between maintaining borrowing discipline and meeting urgent expenditure needs.

Analysts warn that continued rejection of investor bids in a market already showing signs of fatigue could further erode confidence. If participants begin to feel that the government is unwilling to offer competitive pricing, they may withdraw from future auctions altogether or demand higher risk premiums.

Going forward, a more balanced approach may be required—one that accommodates market-driven pricing while still protecting the state from unsustainable borrowing costs. Adjusting auction strategies, increasing transparency, and maintaining open engagement with investors could go a long way in restoring market confidence.

As investor interest wanes and yields decline, the government faces a critical juncture in managing its short-term borrowing. In a challenging economic environment, striking the right balance between cost and participation will be essential to keeping the treasury market stable and functional.