[ 2017-11-08 ]

If our bond was issued at 20% it would have been oversubscribed- Kwarteng hits b
Government has vehemently defended the vehicle it
used in issuing an energy sector bond which has
been undersubscribed

Deputy Finance Minister Kweku Kwarteng said the
ESLA PLC option adopted by government was secured
and the amount raised would not add to Ghana’s
burgeoning public debt.

He argued the bond was undersubscribed only
because of the 19% rate at which it was offered to
investors.

According to him, the investors were used to
the rate of 24% to 26% which the erstwhile NDC
government cheaply gave away.

If we had issued our bond at an interest rate of
even 20%, it would have been oversubscribed,
Kwarteng told Gifty Andoh Appiah on Joy FM’s Top
Story.

He was commenting on the Minority claim that
government has caused financial loss to the state
as a result of the underperforming energy bond.

Government had issued a ¢6 billion cedi energy
bond for ten years at a rate of 19%.
However, the bids raised was ¢1.45 billion short
of what was targeted.

The Minority did not understand why the government
decided to use the ESLA PLC option to issue the
bond, a vehicle they claim was riskier.

They would rather the government of Ghana was used
as a sovereign guarantee in raising the bond.

At a press conference the Minority was vehement in
their criticism of government.

Former Deputy Finance and Agric Minister Fifi
Kwetey said “it is time for government to start
eating humble pie.”

He said for a finance minister who claimed to have
a global acclaim, it should have been easy for him
and the government to raise a ¢6 billion bond
with little or no hitch.

He said at no point did the NDC government fail to
meet their bond targets
“If they cannot raise the money they want to
raise then it’s a problem. In spite of the fine
words the centre cannot hold,” he suggested.

They are struggling with revenue; they removed the
taxes; growth is not happening, the only growth is
what the NDC has done, Kwetey jabbed the
government.

MP for Bolga Central Albert Adongo likened the
bond issue to a pyram and Ponzi scheme.

He said it was quite surprising that a government
which claimed to have raised proceeds of $2.25
billion bond in four hours could not raise ¢6
billion bond after many road shows which lasted
over a month.

Adongo told Joy News government ought to have
issued the bond in the name of government of Ghana
and not a private entity the ESLA PLC.

He did not understand why funds must be raised in
the name of a company not known to Parliament.

He said how can investors be assured of getting
their monies if there are no guarantees other than
letter heads of a private entity ESLA group?
In a response, Deputy Finance Minister explained a
bond is a piece of paper given to investors in
return for money for business activities.

He said government was confronted with using
government’s sovereign guarantee as a collateral
for the bond or to use a private vehicle-the ESLA
PLC.

Kwarteng explained that government did not want a
ballooning public debt and therefore decided to
opt for the ESLA PLC option.

If the sovereign guarantee had been used the
amount raised would have been added to Ghana’s
public debt.

He was convinced the vehicle used was the
appropriate one under the circumstances.

Source - Myjoyonline.com

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