Ghana’s Treasury bill market has entered a period of sustained under-subscription through April 2026, but the emerging evidence suggests that while this is tightening short-term financing conditions, it is not yet significantly derailing government’s fiscal plans for the year. Rather, it is forcing tactical adjustments in borrowing strategy, pricing and instrument mix.
Over the six weeks to April 24, weekly auctions of Government of Ghana (GoG) treasury bills have consistently fallen short of targets, this coming on the back of 15 prior consecutive weeks of full or over-subscription. Data from the Bank of Ghana shows that under-subscription has ranged widely—from about 8 percent to over 32 percent—highlighting a notable weakening in investor appetite.
In early April, the Treasury missed a GH¢4.63 billion target by more than 30 percent, receiving only about GH¢3.17 billion in bids. A week later, the gap persisted, with bids of roughly GH¢5.3 billion against a GH¢7.57 billion target—an under-subscription of nearly 30 percent. By mid-to-late April, the shortfall had moderated but remained persistent, with under-subscription of about 8.2 percent recorded a fortnight ago even as yields have continued to rise.
The cumulative implication of these weekly shortfalls is a noticeable, though manageable, financing gap at the short end of the domestic debt market.
For instance in one April auction, only GH¢2.84 billion was accepted out of a GH¢4.63 billion target. In another, GH¢5.11 billion was raised against a GH¢7.57 billion target, leaving a gap of roughly GH¢2.45 billion.
Across multiple weeks, issuance has often covered only about 70 percent of targeted amounts, implying a recurring weekly shortfall of between GH¢1 and 2.5 billion.
However, these figures need to be contextualised. Treasury bill issuance is only one component of Ghana’s broader domestic financing strategy, which also includes bonds and central bank liquidity operations. Indeed, some auction data show that actual issuance has broadly matched or slightly exceeded maturities in certain weeks, implying near-neutral net borrowing at the short end.
Are fiscal plans under threat?
Despite the repeated under-subscriptions, there is little evidence so far that government’s overall fiscal programme for 2026 is being significantly disrupted basically because government has responded flexibly.
Importantly, following under-subscriptions it has tended to adjust auction targets downward in subsequent tenders, signalling a recalibration of borrowing expectations .It is also increasing reliance on alternative instruments, including longer-dated bonds – a seven year bond issuance was used to attract about GHc3 billion almost a month ago, the first medium term issuance in some three years – and Bank of Ghana Open Market Operations (OMO), which have been used aggressively to manage liquidity .
Instructively, government is engaging in selective acceptance of bids, rejecting expensive offers to contain borrowing costs even in the face of under-subscriptions, which evidences the Finance Ministry’s fiscal comfort despite the ongoing circumstances.
These actions indicate that fiscal authorities are prioritising cost management over volume, suggesting that short-term funding gaps are being actively managed rather than allowed to accumulate into a systemic financing problem.
While no direct public statements specifically addressing April’s under-subscriptions have been widely reported, both Finance Minister Dr Cassiel Ato Forson and BoG Governor Dr Johnson Asiama have previously emphasised the government’s commitment to prudent debt management, including lowering borrowing costs and diversifying funding sources—objectives consistent with the current response.
Why are auctions being undersubscribed?
Several interrelated factors explain the recent decline in demand:
One is investor’s preference for liquidity. Demand has been heavily skewed toward the 91-day bill, which often accounts for over 60–80 percent of total bids. Investors are avoiding longer maturities due to uncertainty, preferring short-term instruments that allow quick repositioning.
The second is rising yield expectations. Paradoxically, even as yields have been rising—91-day bills near 4.9 percent, 182-day around 6.9 percent, and 364-day above 10 percent—investors are still holding back. This suggests expectations of further increases, leading investors to delay commitments.
Third are tight liquidity conditions. Banking system liquidity has been uneven, partly due to central bank sterilisation operations (primarily through open market operations) that mop up excess cash to curb inflationary pressures. This reduces funds available for T-bill purchases.
Next is portfolio rebalancing by portfolio investors. There is growing evidence of investors reallocating funds into bank deposits and alternative instruments offering liquidity, longer-dated bonds where yields are higher and equities, which have recently delivered strong returns.
Added to all these dynamics is the current macroeconomic uncertainty. Global factors—including geopolitical tensions—have heightened risk aversion, discouraging longer-term commitments.
Government’s tactical response
One of the clearest consequences of under-subscription has been upward pressure on yields.
Across April the 91-day yield rose modestly from around 4.8 percent to about 4.9 percent while the 182-day yield climbed toward 6.9 percent and the 364-day yield moved above 10 percent. This reflects a classic supply-demand dynamic: weaker demand persuades the government to offer higher returns to attract investors.
However, the increase has been gradual rather than sharp, suggesting that the government is resisting aggressive re-pricing and instead rationing issuance.
Indeed, Ghana’s financial managers have adopted a multi-pronged strategy. Government is focusing on yield management rather than aggressive rate hikes allowing yields to rise incrementally but has avoiding large jumps that would significantly increase debt servicing costs. Also, setting lower targets in subsequent auctions indicate a shift toward more realistic demand levels.
Government is also diversifying its funding sources, increasing reliance on bonds and BoG instruments to help reduce dependence on T-bills, even as the Bank of Ghana engages in active liquidity management through OMO to stabilize the market.
Strategic options available
Looking ahead, the government has several policy options.
It could increase yields more aggressively, to attract demand but this would raise borrowing costs and worsen debt sustainability metrics. Or it can shift toward longer-dated instruments, locking in funding through bonds that could reduce rollover risk, though at higher interest rates. But with confidence in domestic bond issuances only now being rebuilt after the damage done by recent debt restructuring, government realizes the constraints it faces with regards to this strategy.
Another alternative is to tap external or concessional financing to ease pressure on the domestic market, but the availability of such financing in a sufficient quantum is doubtful. All things considered, in the short term at least, reducing reliance on weekly T-bill issuance and smoothing issuance schedules represents the best bet towards stabilising demand
The recent under-subscriptions signal a tightening domestic liquidity environment and a more cautious investor base, rather than a full-blown financing crisis.
For now, Ghana’s fiscal plans for 2026 remain broadly intact. The government is still able to raise substantial funds— billions of cedis weekly—even if below target. More importantly, it retains flexibility in how it sources financing. However, if the trend persists or deepens, it could push yields significantly higher, .albeit increasing debt servicing costs, or force more fundamental adjustments to fiscal strategy.
In that sense, April’s auction results are less a crisis and more an early warning: Ghana’s domestic debt market is becoming more price-sensitive, more selective, and less forgiving—requiring increasingly sophisticated debt management in the months ahead.
By: Toma Imirhe / businesspostonline
