Govt raises sh1.163 trillion from securities

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In April 2024, the Ugandan government raised a total of sh1,163.64 billion (1.163 trillion) from three auctions of treasury bills and treasury bonds (securities) to refinance maturing treasury instruments and finance other budget items.

This is contained in the finance ministry report on the performance of the economy for April, a copy of which New Vision Online has seen.

The report says particularly, sh441.13 billion was from treasury bills while 722.51 billion was from the treasury bond auction.

“Sh491.53 billion went towards refinancing maturing treasury instruments, while the balance of 672.11 billion was used for financing other items of the budget,” it says.

Treasury bills are risk-free short term financial instruments for investment regularly issued to the public by the Government through Bank of Uganda (BOU), while treasury bonds are long term financial instruments also issued by the Government through BOU to the investing public.

The investment period for treasury bills is short term tenors of three months, six months and a year while that of treasury bonds is long term tenors of two years, three years, five years, 10 years and 15 years.

The report also said following the continued tightening of the monetary policy by BOU, yields (interest rates) on treasury instruments generally edged upwards in April 2024.

The annualised yields for the 364-day and 182-day tenors slightly increased to 13.4% and 12.6% from 13.3% and 12.4% recorded the previous month, respectively.

Yields remained unchanged from the previous month for the 91-day tenor at 9.8% in April.

All auctions for treasury bills were oversubscribed in April 2024, with the average bid to cover ratio amounting to 2.06. This implied high demand for Government securities during the month.

Government also issued two treasury bonds in April, one of two-year tenor and the other of 10-year tenor.

Yields slightly increased for both tenors compared to their previous issuance and also increased to 16.00% in April 2024 for the 10-year bond compared to 15.80% offered for the same tenor in the

February 2024 private placement. For the two-year bond, yields increased to 13.75% in April 2024 on treasury bonds.