By issuing its own notes referred to as BoG bills, the Bank of Ghana (BoG) has raised GHS 3.87 billion. In order to control the money supply and manage liquidity in the banking system, these short-term securities with a 56-day maturity date were sold on the main market.
Although the precise amount of bids made by commercial banks were not disclosed, the auction’s outcome highlighted the BoG’s efficiency in achieving its monetary policy objectives and attracted considerable interest – demonstrating the central bank’s ability to attract funding from the domestic financial market.
According to BoG, the funds raised from the auction of BoG bills will be channeled towards providing direct loans to the government, assisting in meeting its short-term financial requirements, and help government meet its budgetary needs.
The BoG bills serve as a crucial component of Open Market Operations (OMO), a monetary policy tool employed by central banks to influence the cost and availability of credit in the economy by adjusting the money supply. By selling short-term securities on the primary market, the central bank can effectively manage liquidity within the banking system, ensuring financial stability
Gov’t Exceeds Target As Treasury Bill Was Oversubscribed By GHS 75m
More so, the Bank of Ghana, on behalf of the Government of Ghana experienced robust demand for its short-term debt instruments, as the recent issuance of 91-day, 182-day, and 364-day Treasury Bills saw significant oversubscription, surpassing its target by GHS 75 million.
The initial government target of GHS 2,202 million was surpassed by the primary dealers, who showed a lot of interest and raised a total of GHS 2,277 million. Investors’ confidence in the nation’s fiscal stability and short-term investment prospects reflected in this favorable response.
The 91-day Treasury Bill attracted bids worth GHS 1,861 million, with the government accepting all bids, indicating the high demand for this short-term instrument. Similarly, the 182-day Treasury Bill received bids worth GHS 304 million, all of which were accepted by the government.
In the case of the 364-day Treasury Bill, bids worth GHS 112 million were submitted, and the government accepted all of them. This further highlights the appetite for government debt among investors.
The top rates of interest offered by investors for Treasury Bills were 22.9% for the 91-day, 25.4% for the 182-day, and 29.2% for the 364-day Treasury Bills. These rates reflect market conditions and investor risk perceptions, as well as the return expectations of investors.
The government has further announced plans for another issuance of 91-day and 182-day Treasury Bills scheduled for June 30, 2023. The goal is to raise GHS 2,913 million in new funding – to ensure there is enough liquidity to meet the government’s short-term finance needs.
