Finance Minister, Ken Ofori-Atta
About US$1 billion of the Eurobond cash would be channelled into the energy sector to pay off some allegedly over bloated contracts signed between the government of Ghana and the Independent Power Producers.
Almost US$1 billion would be used to retire maturing debts arising from previous Eurobonds to reduce the cost of funds.
The remaining US$1 billion would, however, be channelled into the budget to support rail and road construction, as well as other economic and social intervention programmes including the Planting for Food and Jobs among others.
The US$3-billion Eurobond, which was oversubscribed by almost 400%, would hit the accounts of the Bank of Ghana this week.
Finance Minister, Ken Ofori-Atta, told Accra-based Joy FM’s news analysis programme Newsfile that: “What we intended to do… you know, we have this issue of energy and we are in the middle of negotiating this take-or-pay which is securitised to the country, and we come out boldly to say that we are not going to continue with this type of unbalanced contracts to our country anymore.
“So, we are going to put about a billion dollars aside to look out how we resolve those IPP issues… That’s one. Then we are using close to a billion to also look at the various issues that have occurred in prior years to see whether we can retire them so we reduce the interest costs to us. And then the other billion goes into the budget to look at roads and rail etc.”, Mr Ofori-Atta explained.
Meanwhile, Mr Ofori-Atta says the nation cannot do without borrowing and, therefore, she would have to borrow to finance its projects since revenue mobilisation is inadequate.
According to him, responsible borrowing would be the cardinal principle of President Akufo-Addo’s government.
The International Monetary Fund and the World Bank have expressed concerns about the country's debt level, saying it might push her into a highly debt-distressed country.
But Mr Ken Ofori-Atta disagrees, saying: “We have to borrow because our domestic revenues do not match that and then borrowing on a sovereign basis is rarely global and the question is responsible borrowing is what we need to affirm.”
According to the Bank of Ghana, the stock of Ghana’s public debt rose to 62.1 per cent of GDP, representing GHS214.9 billion at the end of November 2019.
This is compared with 57.9 percent of GDP (GHS172.9 billion) at the end of November 2018.
Of the total debt stock, domestic debt was GHS102.9 billion, while external debt was GHS111.9 billion with a share of 52.1 percent in the total public debt.
