treasury – Adomonline.com

T-bills: Government to borrow GH¢7.73bn on Friday; yields to continue falling

Dorcas Abedu-Kennedy — Wed, 19 Feb 2025 07:39:21 +0000

The government plans to raise GH¢7.73 billion this Friday February 21, 2025 through the issuance of the 91-day, 182-day, and 364-day bills.

This will cover GH¢7.24 billion in maturing bills.

However, the recent rejection of bids by the Treasury indicates that the government would not take all the bids that would be tendered.

This would compress excessive yields that have taken a nose dive for the last three weeks.

In a striking display of fiscal restraint, the Treasury rejected GH¢8.27 billion bids last week, marking its largest rejection since March 2023.

It accepted only GH¢9.43 billion from a total offer of GH¢17.70 billion, covering a target of GH¢8.07 billion and maturities worth GH¢7.54 billion.

This bold move led to yields on the 91, 182, and 364- day bills plummeting by 112 basis points, 88 basis points, and 130 basis points, to settle at 26.86%, 27.81%, and 29.07% respectively.

Analysts expect investors to reassess their yield expectations as the Treasury reinforces market discipline by rejecting high-yield bids and curbing excessive rate demands to contain borrowing costs.

This strategy to further is expected to drive yields further down.

Interest rates expected to stabilize

Faridatu Seidu — Tue, 21 Jan 2025 14:00:38 +0000

Interest rates are expected to stabilize in the next treasury bills auction on Friday, January 24, 2025.

This is despite strong demand for the short-term instruments by the government to finance maturing bills.

Interest rates have been escalating since the beginning of this year, indicating some troubling times. They are now hovering around 29% on average.

Meanwhile, the government plans to borrow GH¢6 billion on Friday through the issuance of the 91-day, 182-day, and 364-day T-bills. This will settle GH¢5.60 billion in maturing bills.

There has been strong investor participation in T-bills lately, driven by the opportunity to capitalize on the high-interest rate environment. This is despite market expectations of a hold in this week’s monetary policy decision.

Analysts believe this trend is further supported by strong demand from the Treasury, amid significant upcoming maturities.

Last week, the government recorded its third consecutive oversubscription in the money market, accepting a total uptake of GH¢8.84 billion against a target of GH¢6.35 billion and upcoming maturities of GH¢5.53 billion.

Despite marginal rejections of the 91-day and 182-day instruments, yields continued to rise.

The 91-day, 182-day, and 364-day bills settled at 28.42% (+8 basis points), 28.96% (+1 bps), and 30.29% (+11 bps), week-on-week, respectively.

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Local banks beg gov’t over single treasury

Dorcas Abedu-Kennedy — Thu, 27 Jul 2017 12:10:50 +0000

Indigenous banks in the country have indicated that even though they accept government’s moves to consolidate its accounts via the Treasury Single Account (TSA), it would be a big blow to them, should it be implemented now.
According to the banks, a significant portion of commercial banks’ funds has been advanced as credit mostly to government institutions and related government projects with overdue repayments, adding that such facilities have over the years been provided to support the economy.
Balance Sheet Problems
They therefore said the transfer of the accounts without the settlement by the government of the overdue credit to government institutions and related (government) projects would create significant balance sheet mismatches and negatively impact on the financial sector in particular and the economy as a whole.
They also pointed out that “given government’s indebtedness to commercial banks and other concerns earlier raised, the banks are placed in a position which constrains us to meet the request to transfer Government of Ghana account balances to the Bank of Ghana.”
Further Problems
The local banks further noted that most of the covered entities were customers of the commercial banks and like any other customer, most of these entities have credit facilities from indigenous banks while maintaining that some even have deposit accounts with them.
“It will be lopsided if their accounts are moved without a correspondent settlement of their indebtedness.
About 11,500 bank accounts belonging to government were identified last year, out of which 5,500 were at BoG, while 6,000 were with commercial banks.
Good Corporate Partners
“Commercial banks in the country have been partners in the development agenda of the government. The banks have invested in, and deployed robust infrastructure and branch networks throughout the country, which are assisting governmental institutions in accessing their revenues in areas which would otherwise have been challenging.
“The cost-benefit analysis of the investment decisions took into consideration, the holding period of government-related deposits among others. Any action therefore that denies the banks the benefit of deposits from such investments would have a negative impact on banks’ operations,” according to the banks.
Real Sector Hitches
The growth in the real sectors of the economy stemming from credit advanced to the private sector and to institutions providing critical services is likely to be adversely affected, with the attendant political and social implications, if this substantial source of liquidity is denied commercial banks.
A case in point is the assistance the commercial banks provided to the energy sector during the power crisis.
Delayed Payments
They revealed that commercial banks were saddled with the effects of delayed payments related to government projects and that this was relatively compensated for by banks’ engagement in managing government revenue business in ensuring optimum value addition and excellent service provision.
Further, various funds under management have been invested pursuant to contractual undertakings on the basis of which commercial banks have since leveraged the said sums.
Further Pleas
Currently, commercial banks transmit balances of all government accounts on a daily basis to a designated SWIFT address.
This allows the government to view all its balances via a single window. Commercial banks are in a position to partner government to offer IT solutions which would guarantee real time access to named government officials responsible for managing government revenue.
The banks believe that this would go a long way to assist the government manage its financial resources in an efficient manner for the mutual benefit of commercial banks and government.
Proposals
For effective implementation of the TSA and to ensure stability in the system, the banks recommended that government should address the exposure of its institutions and related government projects to the various banks.
“The banks believe that government should continue to engage commercial banks in the TSA implementation to reduce the impact on commercial banks’ liquidity,” they stated.
Appeal
“The banks and the government are partners in development. Any action that negatively affects the financial sector leading to the erosion of public confidence in the sector will seriously affect the economy and the government,” according to the banks.
The banks reiterated their support for government business by continuously providing fund management solutions that would ensure that a competitive rate of return is applied to all idle credit balances for the purpose of revenue maximization and ultimate value creation.
Section 46 of Act 921 establishes the Treasury Single Account, and is expected to serve as a unified structure of government accounts to give a consolidated view of government cash resources and also serve as an account into which all government cash, including moneys received by covered entities, shall be deposited and from which all expenditure of government and entities shall be made.
Background
Ken Ofori Atta, Finance Minister, presenting the 2017 budget statement to Parliament in March this year, said the proper alignment of cash inflows and outflows would improve the predictability of budget implementations and cash allocations.
In line with this, the bank accounts of all government institutions will be transferred to the Central Bank for easy management and monitoring.