The Ethiopian National Bank is to offer, for auction, one year treasury bills for the first time today. The bank will issue 100 million birr worth of bills with a one year maturity date.
A total of 5.2 billion birr in bills will be issued by the central bank.
The bills will be sold on auction as per the directive allowing the sale of treasury bills through auction. The new directive allows the discount and corresponding issue prices to be determined by auction.The issue of the one year Treasury bill via the new auction mechanism is expected to act as an incentive to boost the lower than expected sale of T-bills.
It is to be remembered that the central bank urged Ethiopian private banks to purchase new Treasury bills to be charged to the banks’ Payment and Settlement Accounts (PSAs) at the NBE.
Private Banks will purchase T-bills to the value of the money in their PSAs, which approximates 3% of their total deposit according to the agreement reached between the Ethiopian Bankers Association and National Bank officials.
The T-bills are particularly relevant because the Ministry of Finance is limited from borrowing from the central bank this fiscal year due to the government’s commitment to curb inflation by reducing borrowing.
Source: Addis Fortune
