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General News of Thursday, 6 April 2017

Source: theheraldghana.com

Government breaks another election promise

Akufo-Addo government, has issued a 2.25 billion dollars in four bonds contrary to its promise Akufo-Addo government, has issued a 2.25 billion dollars in four bonds contrary to its promise

The Akufo-Addo government, has issued a total of 2.25 billion dollars in four bonds contrary to its campaign promise not to borrow, because Ghana’s debt stock, had risen beyond the country’s capacity to service it.

The New Patriotic Party (NPP) while in opposition, had condemned the Mahama government for pushing the country into a debt crisis, but last Monday, the first two bonds, totaling 1.13 billion dollars was issued at 15 and 7 years period with a 19.75 percent interest.

In addition, the Ministry of Finance, raised the cedi equivalent of USD1.12 billion in 5 and 10 year bonds via a tap-in arrangement.

These activities raised a total of USD2.25 billion and resulted in the lengthening of the maturity profile of the instruments available on the domestic market, a press release from the Finance Ministry stated.

This issuance, represents the largest amount issued by a sub-Saharan African country in a day.

The pricing obtained was also consistent with the initial price range of 18.95percent – 19.85percent.

The issuance attracted a number of global portfolio investors, including a very substantial investment in the 15-year bond by a very well respected global financial investor.

The Minister of Finance, Ken Ofori-Atta, stated that the issuance proceeds would be used to repurchase and/or retire a portion of the higher coupon short-term public debt instruments, explaining that there will not be an overall increase in the total debt stock.

“This is in line with our liability management strategy which seeks to re-profile our public debt stock, extend tenors, reduce short term rollover pressures, and lower domestic interest cost. Additionally, this issuance will further help improve our foreign exchange reserves by over USD2 billion and further support the cedi,” the statement said.

It pointed out that the successful bond issuance and the significant amount raised, especially the longer tenor of 15 years, is an indication of the strong appetite for Ghana Bonds due to the markets’ renewed confidence in the long term prospects of the Ghanaian economy and a major vote of confidence in the new government’s economic policies, fiscal measures and programmes as outlined in the 2017 Budget.

“Also, on Friday the Parliament of Ghana passed the Appropriation Bill for the 2017 budget, including the landmark re-alignment of statutory funds which frees up about GHS4.5 billion in fiscal space for 2017,” the statement said.

“This is an indication of the markets’ belief in our commitment to building an effective public financial management system, improve the country’s debt sustainability outlook and mitigate the crowding out of the private sector. It is imperative that we re-profile our total debt stock of USD30 billion which should help put us on a path of ‘Ghana beyond Aid,” the minister added.