Gov’t diverts $250m Eurobond money to private bank - Bawumia

The NPP vice presidential candidate Dr. Mahamudu Bawumia has alleged the NDC government has transferred $250 million of the latest Eurobond proceeds to a private bank and turned around to borrow back that amount through treasury bills.

According to him, per the arrangement, the government is paying interests again on the same money to the Private Bank.

“I want to provide one example of the recklessness and incompetence I am talking about. Ghana borrowed $1 billion through a Eurobond issue in 2015. Government allocated $250 million of this borrowed funds to the Ghana Infrastructure Investment Fund (GIIF). This Fund is not yet operational,” Dr. Bawumia told a gathering of students at the Accra Polytechnic on the topic: “Youth Unemployment – Causes and Solutions.”

“These Funds were initially deposited at Bank of Ghana where they should be. Notwithstanding the fact that the GIIF is not operational and there are no projects for the GIIF to implement now, the Government unbelievably transferred the $250 million from the Bank of Ghana to GIIF’s account at a private Bank. With no project to execute, these Funds have now been lent to government through the purchase of treasury bills! This is unbelievable.”

The former Deputy Governor of the Bank of Ghana was puzzled at how government could go and borrow funds on the international market at an unbelievably high rate and then give those funds to a third party so it can borrow it back at over 20% on the domestic market.

“How can Government go and borrow funds from the international capital market at 10.75%, give the funds to another party and then borrow those same funds at over 22%! If this is not causing financial loss to the state, I don’t know what it is. It is an example of incompetent economic management”, he stated.

Dr. Bawumia wondered if this latest scheme was another way of siphoning money to lubricate the NDC’s campaign machinery ahead of the 2016 elections this year and called on the government to come clear on the issue immediately and provide answers to Ghanaians.

“Who authorized the movement of the $250 million from the Bank of Ghana to the Private Bank? Who is the interest accruing to? If GIIF is not operational, why was this transfer done? Does the government understand that the money supply would increase? Is this a way to finance the Government’s election campaign? We need answers quickly on this and the Minister of Finance should explain to Ghanaians,” the economist stated.