Breaking Down the GoG’s 13% T-Bill miss

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OPE, news headlines are telling me the Government misses the T-Bill target by 13% as yields edge up across tenors, the Government falls short of the T-Bill target by 13% despite full bid acceptance. OPE, the thing is, I have invested some money into Treasury Bills, too. December is coming, so you know we have to have some cash for rounds. Should I be worried about my money?
Well, no, you don’t necessarily have to be worried about your money, okay? They are referring to an entirely separate matter. Let me explain.

What are T-Bills?
Sometimes the government borrows money to cover its yearly budget deficits, you know, their spending money for the year. Since the money they have on hand is not enough for all the things they want to do, they borrow money. Sometimes they go outside the country to borrow the money, and sometimes they borrow from Ghanaian Citizens. Yes, la, the government sometimes borrows money from you to spend it on things in their budget? But how does that work, OPE? No government official or assembly has come to me for a loan.

How Do They Work? (The Mechanisation)
I get what a T-Bill is now oo but I mean, the Bank of Ghana (BoG) has never come to my house to ask for money. Plus, I usually get the T-Bills at my local bank, so how does that work? Well, here’s how the borrowing works:

Every Friday, the Government of Ghana (GoG) goes to the Bank of Ghana and tells them, Bro, I want to borrow some money from the family members. The BoG responds, “I’ll take care of it”. Since the BoG does not usually deal directly with you, they then announce to the commercial banks and financial institutions and companies on behalf of the Government of Ghana that, “Heyy, GoG wants to borrow some money” The banks, companies, and individuals then respond to the announcement with their terms and conditions. For example, OPE Bank says, “I’ll lend you the money, but you have to pay me 25% of the money I am lending you as interest”. Evangeline Industries also comes in and says, “I’ll lend you some of the money too, but we will take 26% of the loan amount as interest”.

GoG through BoG will study all the offers and decide which ones to accept. I mean, they usually start with the ones with the lowest interest rates. Who wouldn’t choose that? If your offer is accepted, you transfer the money ASAP, and in 91 or 182 or 364 days, you get your money back with interest. Sweet Business. OPE Bank now has GHC 12,000,000 invested in T-Bills. Sometimes they keep it as their own investment, other times they offer T-Bill services to customers like us. When you buy T-Bills through your bank, they might either be helping you buy directly from BoG or selling you part of their own T-Bills.

Now, What Does “Govt Misses T-Bill Target by 13%” Mean?
You see, every week, the government has an amount it wants to borrow. Let’s say, GoG wants to borrow 2 billion cedis this week. But what happened is, they were not able to get the amount they wanted this time; They only got 1.74 billion cedis. What’s important here is that if you already have T-Bills, your money is safe! The government has never failed to repay T-Bills.