A Deputy Minister for Finance, Charles Adu Boahene, has defended government’s decision to issue a $50 billion long-term bond, saying it is the best strategy government can adopt to meet the country’s infrastructural needs in the long-term.
He argues that the bond will provide government a lot of fiscal space to meet the infrastructural plans outlined in the 2019 budget.
Government has been criticized over its intentions of issuing the $50 billion long-term bond to restructure old debts and as well as bridge the infrastructural gap of the country after reports emerged that the money was to come from China.
Speaking on the Citi Breakfast Show, Mr. Adu Boahene maintained that the bond will also attract low interest due to its maturity.
“The market knows your situation at any time. So if you go to the market only when you need it urgently they punish you for that. So what we are saying is that we are going to come up with a programme to raise $50 billion over ten years. Not all at once. Of that amount we are going to use it for purely two things – to refinance some of our more expensive debts and invest in CAPEX. And even in the CAPEX we are going to invest in very particular income generating commercially viable capital expenditure.”
He said currently the country can only borrow little and for shorter periods, and there is what he described as mismatch between how much is borrowed and capital expenditure.
“It’s like we are running but going nowhere because we can borrow very little, we are doing the least of CAPEX, we can’t take any long term strategic plans and we are mismatching our borrowing to CAPEX. You go and build a port, it will take you four years to build, it will be there for 20 or 30 years, meanwhile, we are borrowing five years or seven years money to finance our port. So there is a mismatch between the liabilities we are incurring,” he added.
Century bond to save Ghana from ‘hand to mouth’ existence – Ofori-Atta
The Minister of Finance, Ken Ofori-Atta, while presenting the 2019 budget statement in Parliament on Thursday said the century bond will help Ghana overcome what he termed as “hand to mouth” trajectory, and put it on a firm path “of growth and prosperity.”
“The decision to raise these ultra-long-term bonds is not intended to derail our debts sustainability path, but rather to enhance it. If we really want to uplift ourselves out of this hand to-mouth existence and put our country Ghana on a firm trajectory of growth and prosperity, we will need to source long term affordable financing to invest in strategic infrastructure over the medium to long-term,” Ofori-Atta said when he presented the 2019 budget statement in Parliament today, Thursday.