BoB targets P3.6bn for gov’t as new financial year kicks off
Mbongeni Mguni | Monday March 30, 2026 06:00
The amount sought by the central bank is amongst the highest in recent months, as fiscal authorities continue to fight to balance weak and uneven revenues, with recurrent obligations in the public finance ecosystem.
The auction of three Treasury Bills and three bonds is also the first auction after the sovereign credit ratings downgrade by S&P, a decision that points to upward pressure on government’s borrowing costs.
According to a central bank note, the auction will feature three Treasury Bills with maturities ranging from 90 days to 364 days, offering a total of P3 billion. The three bonds on offer will be the 2031, 2040 and 2050, seeking a total of P600 million.
Trend analysis shows that much of the funding the BoB has raised for the government in recent auctions has been at the shorter end of the spectrum, necessitating the frequent rolling over of debt, rather than the long end, which would give the government flexibility over its debt finance management.
The trend is associated with negative risk assessments in the long term about the government’s finances.
Analysts have noted a steep rise in the government’s debt costs at the monthly auctions, as bidders factor in last year’s sovereign credit ratings downgrades, as well as the uncertain public finance outlook. The BoB has attempted to engage the capital market on the debt costs, but the continuing trends suggest little has been achieved.
At the last auction in January, bidders raised their demands to as much as 28% for the 2043 bond and 24% for the 2035 bond, from 22% and 21%, respectively, at the prior auction, where the two bonds were offered together.
At the January auction, the BoB raised P2.63 billion for the government, narrowly beating its P2.6 billion debt target, a rare feat given the generally tighter fundraising conditions. The achievement came at a cost as yields rose across the spectrum of notes on offer, rising by as much as 152 basis points, according to Kgori Capital calculations.
Finance Minister Ndaba Gaolathe has said government is sensitive to its debt trajectory and is tightening its efficiencies around public expenditure.
“The principle is simple that debt must remain sustainable and directed to productivity-enhancing investments and not consumption,” he told legislators recently in response to concerns about mounting debt. “Where adjustments to frameworks are considered, they must be anchored in debt sustainability analysis, clear guardrails and a credible path to rebuilding buffers.”
He said, given the current fiscal pressures, government would intensify cost containment as well as strengthen procurement practices, limit non-essential travel and enforce prudent financial management across ministries, departments and agencies.