General News of Wed, 5 Sep 201818
Economist cautions government over $50bn Century Bond
The new head of the Economics Department of the University of Ghana, Prof. William Baah-Boateng, has cautioned government to tread cautiously with plans to float a $50 billion Century Bond.
He has advised President Addo Dankwa Akufo-Addo’s economic management team to interrogate the proposal exhaustively before firm steps are taken to secure the 100-year loan.
Commenting on the ultra-long term bond that has gotten economists scratching their heads since the President announced it in China over the weekend, Prof Baah-Boateng said the move raises serious questions.
“When we are bringing such [huge] money, at what point are we going to have it? Is it going to take a year [for all the money to come at once] or it is going to be staggered? Because if you have a GDP of $48 billion and you have $50 billion coming in will the economy be able to absorb it?
“So the President dreamt and it is up to us researchers, policymakers and so on to interrogate it to see how best we can shape that kind of vision to achieve what the President wants. We need to look at it and see how we are going to bring that on board and how and how it is disbursement is going to be –which areas are you going to put this money,” he said.
He made the comments on the current affairs programme, PM Express, on Joy News, a MultiTV channel.
During a ceremony in Beijing to sign some eight Ghana-China co-operation agreements, the President said Ghana was considering the 100-year bonds to finance infrastructural projects.
“The Ministry of Finance and the economists in Ghana are looking at floating a $50 billion Century Bond. This will provide us with the resources to finance our infrastructural and industrial development. We are hoping that, at some stage, China will interest itself, and take a part of it as China’s contribution to Ghana’s development,” he told Chinese President, Xi Jinping on Saturday.
Already, Argentina, Austria and Mexico have issued the rare bonds to finance their national projects.
Prof Baah-Boateng said Ghana must situate its intention to float the ultra-long-term bonds within its own economic context before deciding to subscribe to the bond, urging policymakers not follow blindly.
“Sometimes we need to look at context as well. What is the size of the economy of Mexico? What is the context within which we operate? Argentina and [other] American countries are more developed than those us in Africa…we need to think through it very well,” he admonished.