NPP US$1bn Eurobond 'blind date' fails

The government has scuttled the trump card of the opposition New Patriotic Party (NPP) in its attempt to spread "misconceptions" that the Mahama administration has blown the US$1 billion Eurobond sourced from the international capital market in September this year.

Apparently, only US$191.23 million of the US$1 billion Eurobond has been used by the Mahama administration to fund various projects, leaving an excess of US$808.77 still sitting in the coffers of the Bank of Ghana.

This was elaborated upon in a detailed breakdown of the Eurobond disbursement as contained in a statement issued by the Deputy Minister f Finance and Economic Planning, Cassiel Ato Forson, late last week following feverish allegations of misappropriation of the Eurobond as being championed by Dr. Mahamudu Bawumia- (the running-mate of Nana Addo Dankwa Akufo Addo, the flagbearer of the NPP) and the Minority in Parliament.

" We wish to re-affirm Government's commitment to ensuring that the proceeds from the 2014 Eurobond issue will be used for its intended purpose as published in the prospectus for the benefit of the people of Ghana," the deputy minister stated.

" We hope the information provided in this press release will allay any doubts in the minds of people and put to rest the allegations and misconceptions about the use of the 2014 Eurobond proceeds."

Critics have condemned the NPP for trying all sorts of "dirty tactics" to discredit the Mahama administration with wild allegations which often turn out to be false.

In this case, the NPP's criticism of the Eurobond usage is based on two conflicting accounts, which claims the Eurobond had disappeared into thin air from the Bank of Ghana coffers. Later, it was alleged that contrary to the amount stated as being spent on capital projects as indicated by the government, the Eurobond had indeed been used to settle government's indebtedness to the Bank of Ghana.

Speaking recently to a group of UK-based Ghanaian professionals at a breakfast meeting in London, Dr. Bawumia, former deputy Governor of the Bank of Ghana laid down the agenda, saying the proceeds from the bonds have been misappropriated.

"We are reliably informed that the amount raised has been used largely to reduce the government's indebtedness at the Central bank and that the funds are not available anymore for the purposes for which it was raised," he stated.

"In the prospectus that sought to convince investors, the Minister of Finance indicated that a substantial portion of the amount borrowed will be used for infrastructure development and critical projects," he pressed further.

This statement gave impetus to the minority in Parliament, whose spokesperson on Finance, Dr. Anthony Akoto Osei took up wholly and challenged government to disprove these allegations by providing details on what the Eurobond was used for.

The Ministry of Finance promptly took up the challenge and listed the breakdown indicating that contrary to the NPP information that a bulk of the Eurobond had been used in settling government debt, leaving a balance of US$135.01 million on this item.

Secondly, an amount of US$250 million was planned to be used for Ghana Infrastructure Fund (GIIF) Account. As at October 24th, 2014 the total amount had been transferred into the GIIF Account as a seed capital for the scheme which will be commissioned early 2015

Also, an amount of US$250 million was planned to be used to fund capital expenditure projects. As at today, a total of US$114.95 million has been used to pay for various projects, leaving a balance of US$135.05

Finally, an amount of US$288. 71 million was planned for Counterpart Funding. Nothing has been utilized so far from this item, the Ministry of Finance stated categorically.

According to the deputy Finance Minister, in September, 2014 when Government account with the Bank of Ghana was credited with the proceeds from the Eurobond, Government deposits with the Bank of Ghana increased by the full extent of the amount that was credited to Government, "As a result, Government's net position with the Central Bank improved and this is what reflected in the monetary survey as a reduction in the Bank of Ghana's net claims on government at the end of September, 2014 from the position as at end-August, 2014," Mr. Ato Forson stated, clarifying the controversy over whether the amount was used to settle government debts to the BOG.

"This is the standard treatment of all Government deposits with the central. This treatment has nothing to do with the utilization of the Eurobond proceeds and it also does not mean that the proceeds have been misapplied. The proceeds from the Bond are in designated government accounts with the Bank of Ghana and are still part of Government deposits at the Bank of Ghana for the disbursement made so far," he explained.

After this explanation from the Finance Ministry, Dr. Bawumia have come under serious criticism over his motive for sparking the controversy when he was familiar with the standard practice at the BOG, being a former deputy governor there.

The controversial Eurobond was raised on 18th of September 2014 as Ghana third Sovereign Bond since 2007.