Senior Lecturer, University of Ghana Business School

The uncertainty within the political and general business environment, among others are the major reasons behind the inability for government to achieve its Treasury bills sale target for some weeks now, Financial Analyst and Economist, Dr. Lord Mensah has said.

The government for the third week running failed to meet its target, falling short by GH ¢112 million.

Dr. Mensah tells Joy Business the election uncertainties and the timing of the issuance is also impacting negatively on the T-Bills sale.

“It’s clear on the ground that things were a bit uncertain as far as the environment is concerned, taking into consideration the buildup into the elections and then also after the elections; obviously will have an investor impact. And as a result of that, any investor that government issues Treasury bills or bond I don’t think will have confident to buy such issues”, he said.

Furthermore, Dr. Mensah noted: “let also look at the main purchases of these Treasury bills that are being issued by government–there are mainly banks and other financial institutions–and these are institutions that look at the risk very well. Once the exposure gives a bad signal, obviously they [investors] are not going to buy into it.”

T-Bills sale fell short of target by GH¢112

For the third consecutive week, government failed to meet it Treasury bills sale target, realizing GH¢739.1 million as against GH¢852 million target at the end of the last auctioning on 31 December last year. Interest rate on the instrument also went up by 100 basis points.

The government fell short of its target by GH¢112 million.

This compared to the GH¢109 million achieved the previous week.

The continuous under-subscription which began before Christmas has been a major concern to analysts and market watchers.

It is however unclear whether the continuous holding of cash by banks that are major players in the Treasury bill market during the festive period contributed to government inability to meet its T-Bills target.

This is because the financial intermediaries were hoping to close the year well and may have therefore limited themselves to overnight transactions such as interbank or foreign exchange transactions that will bring them immediate income. 

For the 3 months T-Bill, government accepted all the bids which was a little above GH¢510 million, whilst it accepted GH¢112 million for the six months bills. For the one year note, it raised GH¢116 million at an interest of 16.9%.

The pricing for the 3 and 6 months Treasury bills however went up by 0.1% because investors demanded more for their investments.