[ 2017-04-06 ]

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

Government breaks another election 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.

Source - theheraldghana.com

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