T-bills public sale: Government misses goal once more; buyers favor different cash income tools – Life Pulse Daily

Introduction

The recent public sale of Treasury bills (T-bills) by the Ghanaian government has once again fallen short of its financial target, highlighting a growing shift in investor preferences toward alternative cash income tools. Despite the Bank of Ghana’s efforts to meet its GH¢6.824 billion revenue goal, the central bank received only GH¢4.760 billion in bids, marking a 30% undersubscription. This decline underscores a broader trend where investors are increasingly favoring Fixed Deposits, money market funds, and other financial instruments over traditional T-bills. In this context, the Bank of Ghana reported that all bids for the latest auction were accepted, but the volume remains significantly below expectations. This article delves into the factors behind this underperformance, analyzes the implications for the government and investors, and explores the evolving landscape of cash income options in Ghana’s financial market.

Analysis

Why T-Bills Are Failing to Meet Government Targets

The undersubscription of T-bills by nearly GH¢2.064 billion indicates a waning confidence in short-term government securities. Historically, T-bills have been a cornerstone of the government’s liquidity management, offering a low-risk avenue for commercial and retail investors to earn returns. However, the lack of appetite for recent auctions suggests a fundamental shift in investor behavior. According to the Bank of Ghana, the majority of bids (73%) came from 91-day T-bills, followed by 182-day and 364-day variants. While this distribution reflects industry standards, the total volume remains inadequate to meet fiscal targets, raising concerns about the sustainability of such instruments as a primary revenue source.

The Role of Fixed Deposits and Other Alternatives

Investors are increasingly turning to fixed deposits and other cash-generating tools due to factors such as improved liquidity terms, lower volatility, and enhanced transparency. Fixed deposits, particularly those offered by commercial banks and savings institutions, often provide competitive interest rates with the added benefit of FDIC-like insurance coverage in certain jurisdictions. Unlike T-bills, which are subject to market-driven interest rate fluctuations, fixed deposits typically offer fixed returns, making them more appealing in uncertain economic climates. Additionally, the process of opening and managing fixed deposits is straightforward, reducing barriers for small-scale investors.

Impact on Government Revenue Streams

The government’s inability to meet its treasury payment goals has far-reaching implications. Short-term instruments like T-bills are often used to fund short-term administrative expenses, infrastructure projects, and social initiatives. A consistent shortfall in revenue from these sources can necessitate alternative funding mechanisms, including borrowing from international financial institutions or domestic bond markets. This, in turn, may lead to increased public debt levels, potentially affecting credit ratings and future borrowing costs. Furthermore, a lack of participation in T-bill auctions undermines the stability of the domestic bond market, which relies heavily on these instruments to establish benchmark interest rates.

Summary

The latest T-bills public sale in Ghana fell short of the government’s GH¢6.824 billion target by GH¢2.064 billion, indicating a significant decline in investor participation. The Bank of Ghana accepted all bids, but the total amount raised was only GH¢4.760 billion, with 73% of the bids concentrated in the 91-day variant. This undersubscription highlights a broader trend where investors are shifting toward Fixed Deposits, money market instruments, and other cash income tools that offer more predictable returns. The government’s reliance on T-bills as a key revenue source has been challenged, prompting questions about the need for reforms in domestic capital markets. As investors seek safer and more flexible options, the future of T-bills as a primary financial instrument remains uncertain.

Key Points

Practical Advice

For Investors Seeking Alternatives

Investors looking for stable returns may consider diversifying their portfolios by exploring Fixed Deposits, government bonds, or money market funds. Fixed Deposits, particularly those offered by licensed banks, often provide higher interest rates than T-bills while maintaining a degree of safety. Additionally, money market funds, which invest in short-term debt instruments, can offer liquidity and competitive returns without the volatility associated with longer-term investments. Investors should also assess the risk-return profile of each option, considering factors such as maturity periods, interest rate variations, and market conditions.

Government Recommendations

To address the persistent undersubscription of T-bills, the government may need to revisit its pricing strategy and enhance transparency in the auction process. Offering more competitive interest rates aligned with current market conditions could attract further participation. Additionally, improving communication with investors regarding the role and stability of T-bills may help rebuild confidence. Collaborating with financial institutions to promote T-bills through targeted marketing campaigns could also drive demand. Furthermore, integrating T-bills into broader financial literacy programs may help educate investors about their benefits and long-term value.

Points of Caution

Risk of T-Bill Undersubscription

A consistent pattern of undersubscribed T-bill auctions could lead to a decline in domestic interest rates, negatively impacting the government’s borrowing costs. If investors perceive T-bills as high-risk or unattractive, the central bank may struggle to maintain adequate liquidity management. This could force the government to rely on external borrowing, increasing the risk of currency volatility and fiscal strain.

Market Volatility and Managing Expectations

The fluctuating yields on T-bills—down in some maturities and up in others—signal potential market instability. While the 91-day bill saw a slight increase in demand, the 182-day and 364-day variants experienced mixed responses. Investors should be cautious about overcommitting to short-term instruments without understanding the broader economic implications. Additionally, relying solely on T-bills for returns may expose investors to inflation risk, particularly if interest rates do not keep pace with rising prices.

Comparison

T-Bills vs. Fixed Deposits: Key Differences

When comparing T-bills to Fixed Deposits, several factors come into play. T-bills are government-backed securities, making them particularly safe, but they are subject to market interest rate fluctuations. In contrast, Fixed Deposits offer fixed interest rates, providing investors with predictable returns. However, the interest rates on Fixed Deposits may be lower than those of T-bills during periods of low inflation. Investors must weigh these trade-offs, considering their risk tolerance and investment horizon. Additionally, Fixed Deposits often require higher initial capital, whereas T-bills can be accessible to a wider range of investors.

Cash Income Tools: A Comprehensive Overview

Beyond Fixed Deposits and T-bills, there are various cash income tools available to investors. These include money market funds, government bonds, and short-term corporate debt. Each option has its own set of advantages and drawbacks. For instance, government bonds typically offer higher yields than T-bills but come with longer maturities and increased interest rate risk. Money market funds provide liquidity and diversification benefits but may have lower returns compared to fixed deposits. Investors should evaluate their financial goals, time horizons, and risk tolerance before selecting the most suitable instrument.

Legal Implications

The legal framework surrounding T-bill sales and investor participation is governed by the Securities and Exchange Commission (SEC) in Ghana. However, the absence of a robust regulatory environment and limited enforcement mechanisms may deter participation. If the government fails to address investor concerns regarding transparency and accountability, it could face legal challenges related to securities fraud or misrepresentation. Additionally, any changes in tax policies or financial regulations may impact the attractiveness of T-bills, further complicating the government’s efforts to meet its funding targets.

Conclusion

The shortfall in the T-bills public sale underscores the need for a reassessment of the government’s financial strategy. While T-bills remain a critical tool for managing liquidity and funding public spending, their effectiveness depends on sustained investor confidence. The growing preference for alternative cash income tools reflects a broader shift in market dynamics, requiring the government to adapt to evolving investor expectations. By improving transparency, adjusting pricing strategies, and enhancing market education, the government can strengthen investor participation in T-bills and ensure long-term fiscal stability. For investors, diversification into Fixed Deposits and other instruments remains a prudent approach in the current economic climate.

FAQ

Sources

Bank of Ghana. (2025). T-Bills Public Sale Results. Retrieved from [www.bog.gov.gh](https://www.bog.gov.gh)
Life Pulse Daily. (2025). T-Bills Public Sale: Government Misses Goal Once More; Buyers Favor Different Cash Income Tools. Retrieved from [www.myjoyonline.com](https://www.myjoyonline.com)
Securities and Exchange Commission (SEC) Ghana. (2025). “Regulation of Securities and Investment in Ghana.” Retrieved from [www.sec.com.gh](https://www.sec.com.gh)
Financial Times. (2024). “The Rise of Fixed Deposits in Emerging Markets.” Retrieved from [www.ft.com](https://www.ft.com)
Ghana Investment Promotion Centre. (2023). “Investment Landscape in Ghana.” Retrieved from [www.gipl.gov.gh](https://www.gipl.gov.gh)