Ghana borrows $ 10.6 billion to pay for consumption – Adongo

Company News of Friday, March 29, 2019

Source: www.ghanaweb.com

2019-03-29

Isaac Adongo, member of Bolgatanga Central Parliament, revealed that Ghana borrows $ 10.6 billion a year to pay for the consumption of goods and services.

According to Mr. Adongo, this is a worrying problem that deserves to be solved, otherwise the government led by Akufo-Addo will plunge the country into misery, leaving huge debts for the next generation.

Speaking to Parliament on Thursday after the finance minister addressed legislators on the cedi's write-down and the Eurobond, the MK for Central Bolga said the government would have nothing to say. not had to start with the Eurobond because it is a total waste of time since it is not used properly.

The NDC MP explained that it is appalling to know that the current government borrows only to pay for goods and services.

"What is worrying is the fact that there is nothing left to pay for goods and services and that we borrow to pay for goods and services. So if we take goods and services together, you take the difference in wages and salaries, we borrow 10.6 billion euros each year to pay our consumption … We leave a debt to our children without having active and you're celebrating it again, "he asked.

"It's so serious that if we look at the use of the last two Eurobonds, it's better not to go to the Eurobond in 2017 because if that's what it is that we are going to do, then this country is doomed … You go to the capital market to borrow and spend for consumption. On the amount of 750 million euros, 630 million of our euro bond were spent for consumption and the finance minister should be worried, "he warned.

On March 19, 2019, the government of Ghana issued its seventh euro bond after its first appearance on the international capital market in 2007.

An amount of 3 billion USD was collected in 3 tranches, 7, 12 and 31 years after the oversubscription of the loan 7 times.

The proceeds of the obligation, as stipulated in the 2019 budget, are intended for budget support and liability management, in line with previous obligations. The issuance of Eurobonds has become an essential source of external financing for successive governments, but this is not without risk.

On March 28, Finance Minister Ken Ofori-Atta, speaking to lawmakers, recalled that the strong participation of foreign investors in Eurobond's recent $ 3bn issuance in Ghana confirmed investor confidence in Ghana.

Comparing the $ 3 billion bond to the last $ 750 million bond raised under the Mahama administration, Ofori-Atta said the government had obtained a better coupon rate, a positive sign while Ghana was withdrawing from an IMF program.

"The last $ 750 million Eurobond from the previous government was issued in 2016. Backlog was $ 4 billion, five times higher. But that represented a high cost of 9.25% over six years, "said Ofori-Atta.

He pointed out that, compared to this year's 7.785% bond for a seven-year bond, the government has been successful in setting the price of its bonds.

Mr Ofori-Atta noted that with an oversubscription of around 20%, the international investment community was telling the government that it was prudent to invest in Ghana.