BoU to raise UGX355 bn in Treasury Bills auction

BoU to raise UGX355 bn in Treasury Bills auction The Bank of Uganda (BoU) is set to auction Treasury Bills worth UGX 355 billion today, Wednesday, September 10, 2025, as part of its mandate to manage liquidity in the financial system and support short-term government financing needs. According to the tender notice issued under the Public Finance Management Act, 2015, the auction would target three maturities: UGX255 billion in 364-day bills, UGX 75 billion in 182-day bills, and UGX 25 billion in 91-day bills. The securities will be available to Primary Dealers (PDs)—a select group of commercial banks that includes Stanbic, Standard Chartered, and Absa—as well as other financial institutions and individual investors. Competitive bids from PDs must be at least UGX 200.1 million, while non-competitive bids through any commercial bank start from as little as UGX 100,000, allowing retail investors to participate. Under the rules, successful bidders will be allotted securities at a single uniform price, corresponding to the lowest accepted price per 100, which matches the highest accepted yield. Treasury Bills are short-term debt instruments used by the government to raise funds while also serving as a critical tool for monetary policy. For the Bank of Uganda, this September auction is designed to achieve two main objectives. First, it provides budgetary support by covering immediate government financing gaps. With tax collections often uneven across the fiscal year, Treasury Bills help to smooth cash flows and keep public spending on track. Uganda’s domestic debt has continued to expand as the government leans on local borrowing to fund projects and recurrent expenditure. Second, the issuance helps BoU control liquidity in the financial system. By mopping up excess cash through the sale of securities, the Central bank reduces inflationary pressures that could destabilize the economy. Uganda’s annual inflation has hovered in the mid-single digits in 2025, but pressures from high food and fuel costs remain a concern. T-Bills therefore play a stabilizing role in keeping inflation within the BoU’s medium-term target of 5 percent. For investors, Treasury Bills are an attractive option because they are considered low-risk, backed by the full faith of the government. They provide competitive yields compared to ordinary savings, and with maturities of 91, 182, and 364 days, they offer flexible short-term investment opportunities. Analysts note that today’s auction would provide an indication of market sentiment on interest rates. If investor demand is strong, yields are likely to fall; if demand is weak, the government will be forced to offer higher returns to attract buyers. Uganda’s domestic debt stock has grown steadily, reaching over UGX 37 trillion by June 2025, up from UGX 34 trillion the previous year. While borrowing through securities remains cheaper than external commercial loans, economists warn that excessive reliance on short-term debt could increase refinancing risks. Nevertheless, the September Treasury Bill auction demonstrates the Central bank’s balancing act – meeting the government’s financing needs while maintaining stability in money markets.