Government exceeded its Treasury bills sale target for the seventh-week running, as it mobilized GH¢1.15 billion from the weekly auctioning of the short term securities.

Government had targeted GH¢1.043 billion, but mobilized an extra GH¢112 million.

This suggests that the domestic economy appears to be picking-up at a rapid pace following months of a slow-down because of the impact of the covid-19 pandemic.

Analysts believe activities in the economy is growing as aggregate demand picks up. This could reflect in the third and fourth quarter Gross Domestic Product figures to be released by the Ghana Statistical Service later on.

According to the trading figures, the interest rate on the short term government instruments continue to remain steady. It hovers around 14.09% for the 91-day and 182-day T-bills, whilst it is going for 16.9% for the one-year bill.

Senior Research Analyst at Databank Research, Courage Martey insists the recent payment of locked-up cash to depositors of defunct financial institutions is what has accounted for liquidity boost in the Ghanaian economy.

“We are in a period when the market is more oriented towards short term investment horizon than going long. So the funds that were paid to depositors of financial institutions has to be held in some accounts which is in the banking system, and so the banks are now investing in government securities, particularly at the shorter end of the curve”, he reiterated.

Demand for T-bills will rise further in the coming weeks when locked-up funds of customers of defunct fund management firms are paid.

This will also help government to raise enough funds to settle maturing debt and also invest in capital projects.

September 2020 MPC Report

The September 2020 Monetary Policy Committee Report revealed that interest rates on the money market saw mixed developments as rates on short to medium term instruments eased, but generally tightened at the longer-end in August this year.

On a year-on-year basis, the 91-day Treasury bill rate declined to about 14% in August 2020 from 14.7% a year ago.

Similarly, the interest rate on the 182-day instrument declined to 14.1% from 15.2%.

With the exception of the 6-year bond, yields on the 7-year, 10-year, 15-year, and 20-year bonds all increased.

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