{"id":207220,"date":"2024-08-08T08:24:04","date_gmt":"2024-08-08T08:24:04","guid":{"rendered":"https:\/\/www.ghanamma.com\/2024\/08\/08\/government-domestic-borrowing-to-rise-further-in-second-half-of-2024\/"},"modified":"2024-08-08T08:24:04","modified_gmt":"2024-08-08T08:24:04","slug":"government-domestic-borrowing-to-rise-further-in-second-half-of-2024","status":"publish","type":"post","link":"https:\/\/www.ghanamma.com\/2024\/08\/08\/government-domestic-borrowing-to-rise-further-in-second-half-of-2024\/","title":{"rendered":"Government domestic borrowing to rise further in second half of 2024 \u2013"},"content":{"rendered":"

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Government\u2019s domestic market borrowing could reach the GH\u00a2220 billion mark by close of the year, as it remains barred from the international market.<\/strong><\/p>\n

This is because financial services firm Databank has upped its projection for full-year government borrowing from GH\u00a2180billion to GH\u00a2220billion, a 22 percent increase from earlier forecasts.<\/p>\n

This revised estimate comes as the nation grapples with high refinancing obligations and other pressing financial needs. With approximately GH\u00a2115billion already raised in first-half of the year, government is expected to seek an additional GH\u00a2105billion before year-end \u2013 translating to an estimated weekly borrowing requirement of GH\u00a24billion.<\/p>\n

\u201cGovernment\u2019s aggressive borrowing strategy is primarily driven by the need to refinance maturing debt. We anticipate about GH\u00a290billion in maturities to be settled in second half-2024 alone, which accounts for weekly maturing bills of GH\u00a23.5billion,\u201d Databank said in a report.<\/p>\n

\u201cGovernment\u2019s high money market demand will be fuelled by an estimated coupon payment of over GH\u00a25.5billion, coupled with the cash needed to settle other government commitments,\u201d it added.<\/p>\n

This surge in government borrowing comes at a time when the nation is already battling high inflation and currency depreciation.<\/p>\n

The country\u2019s year-end inflation rate is projected to remain above 20 percent, significantly higher than the central bank\u2019s target range.<\/p>\n

Economists warn that such high levels of domestic borrowing could have far-reaching implications for the economy.<\/p>\n

There are concerns that government\u2019s substantial presence in the money market risks crowding out private sector borrowing and could keep interest rates elevated, despite modest improvements in the inflationary trend.<\/p>\n

Heightened financing pressures continued to drive yields on Treasury bills higher last week. The 91-day bill rose by 3 basis points to 24.82 percent, while the 182-day bill surged by 2 basis points to 26.76 percent. The 364-day bill remained unchanged at 27.86 percent.<\/p>\n

Compared to a target size of GH\u00a24.36billion, investors tendered an amount of GH\u00a23.8billion across the 91- to 364-day bills, reflecting a 13 percent auction shortfall. This adds to the tally of weekly undersubscriptions for a third consecutive week.<\/p>\n

Uptake by the Treasury is however sufficient to pay off a sum maturing face value of GH\u00a23.37-billion due this week across all the bills. With a sum maturity size of GH\u00a26.17billion due across all bills next week, the Treasury intends to raise GH\u00a26.56billion across all bills to refinance its maturities.<\/p>\n

The next auction is scheduled for Thursday, 9th August 2024. It is expected that the Treasury will miss its auction target, given that this will be the year\u2019s largest target size amid thin GH\u00a2 liquidity. Rates on T-bills are expected to rise as the Treasury accommodates higher bids to fill its huge funding needs.<\/p>\n

Moreover, the increased borrowing may complicate\u00a0Bank of Ghana\u00a0efforts to control inflation. The central bank has maintained its policy rate at 29 percent for four consecutive meetings, reflecting the challenging economic environment.<\/p>\n

As Ghana heads into an election year, concerns are mounting about the potential for spending-induced inflationary pressures. Government\u2019s high borrowing needs add another layer of complexity to an already delicate economic situation.<\/p>\n

The fiscal balancing act has become even more precarious. Government must somehow meet its financing needs without derailing the fragile economic recovery or further stoking inflation, market watchers have pointed out.<\/p>\n

Source: thebftonline.com<\/p>\n<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"

Government\u2019s domestic market borrowing could reach the GH\u00a2220 billion mark by close of the year, as it remains barred from the international market. This is because financial services firm Databank has upped its projection for full-year government borrowing from GH\u00a2180billion to GH\u00a2220billion, a 22 percent increase from earlier forecasts. This revised estimate comes as the […]<\/p>\n","protected":false},"author":1,"featured_media":207221,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9],"tags":[],"class_list":["post-207220","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business"],"yoast_head":"\nGovernment domestic borrowing to rise further in second half of 2024 \u2013 - Ghanamma.com<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.ghanamma.com\/2024\/08\/08\/government-domestic-borrowing-to-rise-further-in-second-half-of-2024\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Government domestic borrowing to rise further in second half of 2024 \u2013 - Ghanamma.com\" \/>\n<meta property=\"og:description\" content=\"Government\u2019s domestic market borrowing could reach the GH\u00a2220 billion mark by close of the year, as it remains barred from the international market. 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