Bawumia: $1 billion Eurobond cash missing in 2015 Budget

The 2016 vice presidential candidate of the New Patriotic Party (NPP), Dr Mahamudu Bawumia, has charged the government to list projects the $1 billion Eurobond raised on the money market has been used for.

His concerns follows the Finance Minister's failure to mention it in the 2015 budget statement presented to parliament last week.

Dr Bawumia believes the $1 billion Eurobond has been used to do nothing more than artifi­cially shore up the cedi from depreciating against the major currencies.

Last September, Ghana sold a $1 billion Eurobond, five days before talks began with the Inter­national Monetary Fund (IMF) for a possible financial bailout. The finance minister said at the time that a bigger chunk of the cash raised was to develop the country's infrastructure.

But Dr Bawumia said the government had not invested Ghana's limited foreign exchange in productive projects, but was only used to stop the local currency from its free fall.  

According to the economist and running mate to Nana Akufo-Addo, the NDC had spent over $5 billion more in six years to sustain the cedi than the NPP did in eight years, and yet the NPP did a far better job than the current government in stabilising the cedi.

Addressing a group of UK- based Ghanaian professionals at a breakfast meeting in London Saturday, Dr Bawumia, former Deputy Governor of the Bank of Ghana, said, "We are reli­ably informed that the $1 billion raised from the sovereign bond has been used to reduce govern­ment's indebtedness at the Cen­tral Bank and that the funds are not available anymore for the purpose for which it was raised."

Dr Bawumia stressed, "This is sad and raises a whole lot of credibility issues. How can we borrow such a huge amount to fill a gap at the Bank of Ghana, the central bank? Is this the use to which non-concessional bor­rowing should be put? This is a very serious development and the Government and the Bank of Ghana should urgently comment on it."

Dr Bawumia recalled, "The Government announced to the world that it was seeking an IMF- supported programme to help address the current imbalances in the economy. On the basis of this, it was able to calm the nerves of investors and issue a $1 billion sovereign bond."

He challenged the Finance Minister, Seth Terpker, to show to Ghanaians that he had used the $1 billion for the purpose the bond was issued.

"In the prospectus that sought to convince investors," the renowned economist explained, "the Minister of Finance indicated that a substan­tial portion of the amount bor­rowed would be used for infra­structure development and criti­cal projects. What projects did the Minister of Finance have in mind?"

Calling for details, Dr Bawu­mia stressed, "The Minister should list and provide a detailed plan of what projects he has in mind."

He further disclosed, "In the last six years, the Bank of Ghana has spent in the range of $6.5 bil­lion to sustain the cedi. In the eight years that we, the NPP, were in office, we spent only $1.2 billion to maintain the value of the cedi and we did relatively well to keep the cedi stable."

Before the September bond issue, the local currency, the cedi, fell around 40 percent against the

dollar between January and August, gaining ground in part because of the IMF bailout announcement and also the Eurobond.

Dr Bawumia said at the Young Executive Forum-spon­sored Breakfast at the Pestana Chelsea Bridge Hotel that there was no guarantee that govern­ment could secure an IMF agree­ment in 2015 and that the impli­cations could be dire, including donors withholding grants for budgetary support.