Publish details of $1bn Eurobond – Bawumia challenges NDC

• Posted on December 1, 2014December 1, 2014
• by Nana Kwesi Coomson
• Comment

The 2016 New Patriotic Party (NPP) vice presidential candidate, Dr Mahamudu Bawumia, has challenged government to disclose what it has used proceeds from the $1 billion sovereign bonds (otherwise known as Eurobond) it floated some two months ago for, and how it spent it.

Dr. Bawumia was responding to a reaction from the Ministry of Finance on an issue he had raised earlier concerning the proceeds from the Eurobond which did not reflect in the 2015 budget read by the Finance Minister, Seth Terkper, a little over a week ago.

The running mate to Nana Akufo-Addo for the 2016 elections believes strongly that the money is not available; otherwise it would have been captured in the 2015 budget.

Dr Bawumia quizzed, “Was all the $1 billion spent in the last couple of months or would most be spent in 2015 and on what?

“It is a simple question that demands a simple answer. Show us the projects and the amount of financing from the September Sovereign bond proceeds. How much of the sovereign bonds has been used to reduce Government indebtedness at the Bank of Ghana in 2014?” he queried.

Government borrowed some $1 billion on the international capital markets in 2013 and another $1 billion in September 2014.

Dr Bawumia noted that it is a simple fact that the funds could not be used to pay down the country’s debt and at the same time, have them (funds) available for capital expenditure. “You cannot eat your cake and have it at the same time! We are not impressed by answers that try to pull the wool over the eyes of Ghanaians.  If the September 2014 sovereign bond would be used to finance any projects in 2015, then that expenditure should be in the 2015 budget”, he demanded.

Under the Bank of Ghana Act, he explained that the bank could not extend credit to government in excess of 10% of government revenue in the year. “The sovereign bond has been used to bring government within this limit. It is therefore not available for capital expenditure unless the law is violated”, he told DAILY GUIDE.

According to him, “In the interest of transparency, the Bank of Ghana should publish details of payments and transfers out of the September 2014 Sovereign Bond Account and the balance on the account for all to see. This is a very simple request for an account that is only two months old, unless this Government has something to hide.”

While the finance ministry has fought back saying it was using $1 billion proceeds from a Eurobond sale in September judiciously, there are allegations that the money has been used to pay debts incurred by the central bank.

The ministry’s decision to make public how the over-subscribed $1 billion Eurobond fund had been expended was in response to Dr.  Bawumia’s assertion that it (ministry) had been cushioning the weak cedi artificially with over $6 billion.

Dr Bawumia has argued that the reason the $1 billion Eurobond was not mentioned in the 2015 budget statement was because it had not been used for the intended purposes, challenging the ministry to publish a full list of projects executed with the money.

Speaking in the UK, Dr. Bawumia, who was a former Governor of the Bank of Ghana, claimed the money had been significantly wasted in shoring up the cedi that had fallen against major international currencies.

Deputy Finance Minister, Cassiel Ato Forson, has rebutted Dr Bawumia’s allegations saying they were unfounded.

“What we said is that we are going to use $250 million for capital expenditure and to take another $300 million for counterpart and matching funds and also to use $200 million for maturing short-time debts,” he asserted.

According to Ato Forson, his outfit would at the appropriate time brief parliament fully on the funds.

Ghana’s debt profile is 60.8 percent of GDP making it unsustainable.

But Ato Forson says a large chunk of the debt is owed by independent state agencies.

While a lot of Ghanaians are complaining that the economy is in tatters and dealing a hefty blow to them, Ato Forson, on the other hand, has said the economy is in good shape.

But some analysts have indicated that if it were so, Government would not go to the IMF for a bailout to fix its gross mismanagement.

By Samuel Boadi