Ken Ofori-Ata has caused GHC5bn financial loss to Ghana – NDC MPs

Fri, 9 Jun 2017 Source: Kasapa FM

The Minority National Democratic Congress (NDC) Caucus in the Parliament of the Ghana says Ghana in the next fifteen years would incur GH?5billion losses in the US$2.25billion domestic bond that was recently issued by the Finance Minister, William Ken Ofori-Atta.

Mr. Ofori-Atta, Wednesday, told Members of Parliament when he appeared on the floor of the House to deliver a statement on the bond transaction which has become a controversial issue in some Ghanaian quarters that the said transaction is impacting positively on the economy.

For instance, he said the 15 and 7 year old bonds have triggered a downward trend in the cost of borrowing and also strengthened Ghana’s current account and built its international reserves. The Cedi to US Dollar rate which was 4.46 in February 2017 and 4.34 in March 2017 appreciated to 4.19 as at end of April 2017.

The bond, he further noted, has also had a significant impact on Ghana’s credit ratings. This, he added, is evidenced in Fitch Ratings a few weeks ago where the rating agency affirmed Ghana’s sovereign rating at B and revised the outlook from negative to stable.

“This is significant good news for investors and the economy,” he noted.

Additionally, he said the bond which was issued domestically has eliminated the costs associated with cross continental road shows and saved the country about GH?600million in interest payments and reduced refinancing costs associated with short term borrowing.

The Finance Minister was summoned to Parliament by the Speaker, Rt. Hon. Prof. Aaron Michael Oquaye, when the Minority Leader, Haruna Iddrisu moved a Half Hour Motion on May 31, 2017, to provide detailed information on the recent $2.25billion bond including the full complement of documentation related to the issuance, participants, the utilization of the proceeds and currency in which the bond was settled.

However, the Ranking Member of the Finance Committee and NDC MP for Ajumako-Enyan-Essiam Constituency, Mr. Cassiel Ato-Forson, responding to the claims by the Finance Minister argued that the said US$2.25billion bond which was issued with a coupon rate of 19.75% cause the country a whopping amount of GH?5billion in fifteen years.

“I don’t know how they arrived at GH?600million. Looking at April 2017, the short term yield as the Minister alluded to used part of the proceeds to switch. Mr. Speaker, if he is switching, as at April 17, the 91 day has a coupon rate of 16.35% and the 182 day has a coupon rate of 16.7%. We are borrowing at 19.75% and we are hearing that we have made savings because of the switching. Per my calculations, if you borrow an amount of US$2.25billion at 19.75 and you used it to switch short term debt of 16.35%, you have caused the State GH?330million losses per annum. If you multiply it by 15 years [GH?4,950,000,000] the total loss to the State is GH?5billion. So, where is the savings coming from?”he quizzed.

Source: Kasapa FM
Related Articles: