Opinions Fri, 3 Jun 2011

Where is the Bond Money, President Mills?

Basically, government issues bonds when it is running short (deficit). In other words, bonds are IOUs issued by governments when they need money for a variety of reasons. It is a “White Collar way” of borrowing for governments. “Bond” sounds deceptively better than borrow. That is all there is to government bonds. (Don’t let the government “experts scare you with the “intricacies of bonds. You don’t know how a gun works or how it is made. But you know how it is used. You know it has bullets and trigger etc. It can be useful and can equally be abused)

In the same vein, we have governments, we know the meaning of and the intent to “borrow”; we know what a certificate of IUO is. Combine them and you get a government bond. The government simply gives you a paper for your money, payable with interest at the “appointed time”. Like the gun also, the power to issue bonds-borrow- can be useful or can be intentionally and unintentionally abused by governments; especially by spend -drift , fiscally undisciplined, Utopian social interventionist and babysitting governments like the National Democratic Congress.

This thus brings us to the announcement last week that, for the third time this year, the Mills- Mahama government, through the Bank of Ghana, was going to borrow (issue bonds) once again; this time, GH300Million with another GH400Million to be borrowed – to be issued- next month. Already, the Mills administration has borrowed (issued bonds twice) GH600Million.

Combined, in six months, President Mills has borrowed GH1billion -and change- through the issuance of bonds. Overall, Mills has borrowed more money in two and half years than the whole eight years of the NPP administration; including given away, freely, $1.6b dollars to STX. (That project will never be completed.)

As at now, Prices for Cocoa are at a 30 year high on the international market. (Government spokespeople regularly gloat over "substantial" increase in cocoa production under Mills). Gold is experiencing record prices on the world market as well. Oil, well, we don’t have to waste ink on the record setting prices for oil. Coincidentally – or fortunately- Ghana shipped its first barrels of oil this year. And according to all credible accounts, Ghana has received it share of the “first sale”; almost two thirds of a billion Ghana Cedis. In all, a record setting year, so far, for certain commodities (who could have predicted the Arab Revolution and the Ivorian Crisis); “windfalls” that could have be wisely use to take a little pressure off other programs domestically financing the budget deficit- as stated in the 2011 budget.

So the question begging to be asked is: what has forced the Mills administration, in its third year, to issue bonds –borrow- THREE TIMES in less than a year when it issued bonds, ONLY TWO TIMES the whole of LAST YEAR?

It is not the issuance of bonds, in general, that is on trial here. (Its merits have been extolled by experts especially when it used judiciously; which in turn depends on the level of government spending, the number one cause for deficit.) It is the frequency of its use- abuse -in a relatively short time that has raised red flags.

So what has forced Mills to borrow –issue bonds thrice for - GH1Billion in six months when he only borrowed – issued bonds only twice for – GH500Million last year? What has changed in the past few months? What is it that the Mills- Mahama government failed to anticipate?

Or it is simply lack of imagination as to other ways to raise money?( They have taxed the country bloody dry)

Of course, the standard, of the shelf justification that accompanied the news item announcing the issuance of the latest bond was that, government issued the “ bond to pay off government debts that are maturing”. That is, government had to borrow to pay off money he has already borrowed- due to lack of imagination. Which debts, the report did not say.

But with an unprecedented primaries at hand and charges of wholesale corruption leveled at Mills and his administration, by both the opposition and the founder of his own party – including charges of vote buying ,i.e., “politics of financial influence”-, it is not out of place to question and suspect the government’s standard answer and dutifully ask President Mills ,“ what have you done with the one billion Ghana Cedis from the bonds...why do you continue to borrow at a record pace......have you run out of ideas, Mr. President?"


A friend ,“conspiratorially” ,observed that the second of the two bonds issued last year coincided with the climax of the nine month long birthday celebration of the Grandfather of African Dictatorship, Nkrumah; whiles the Census and District assemblies had to be postponed two and three times, respectively.

Akwasi A. Afrifa Akoto.

Columnist: Afrifa, Akwasi