BoG Requests Bids For 2-Year Note Issue

Dr Kofi Wampah – BoG Boss
The Bank of Ghana (BoG), on behalf of Government, has commenced proceedings inviting bids for the issue of a 2-year fixed rate note intended for the mobilization of GH¢300 million to refinance maturing domestic debt and liquidity management.

The actual auction process is slated for September 11, 2015 and the instruments shall be issued at par, information from the Bank of Ghana (BoG) on the issue indicated.

It also said the 2-year fixed rate bond would be available to both resident and non-resident investors.

Last month, Government was expected to borrow GH¢3.19 billion through the 91-day T-bills, GH¢1.25 billion through the 182-day T-bills, GH¢120 million through the 1-year note, GH¢300 million through the 2-year note and GH¢500 million through a 5-year fixed rate bond.

However, the GH¢500 million 5-year fixed rate bond was shelved due to market developments, bringing total borrowings by government from investors to GH¢4.86 billion.

There was no detailed information on the nature of such market developments.

September 2015
For this month, government intends to borrow a total of GH¢4.17 billion made up of some GH¢2.4 billion through the 91-day T-bills, GH¢950 million through the 182-day T-bills, GH¢120 million through the 1-year note, GH¢300 million through its 2-year T-bills, as well as float a 3-year fixed rate bond to mobilize GH¢400 million.

The bids for the auction, according to BoG, are expected to be electronically delivered to the Central Securities Depository Auction module by September 11.

Rising national debt
As at August, this year, the country's total national debt recorded GH¢90 billion.

Per the Issuance Calendar of Government of Ghana on its securities, total borrowings from both local and foreign investors are expected to total GH¢25.3 billion for the second half of this year.

This would bring the total national debt to GH¢115.3 billion, a figure unrivaled in the history of Ghana.

Satisfying IMF's conditions
The IMF, in a recent review of government's performance under a three-year bailout agreement for Ghana, asked the country's authorities to ensure that the wage bill remained within budget despite calls from labour unions for better conditions of service for workers.

It also encouraged government to adhere to the employment freeze to address fiscal imbalances.

'It is crucial to continue the policy of controlling the wage bill by adhering to the net hiring freeze, excluding healthcare and education while further implementing the payroll clean-up plan.'

Cedi depreciation
Even though the IMF endorsed government in its review, it said that government was facing challenges in strengthening the cedi.

Recently, the Central Bank announced that it had injected $20 million onto the forex market to stabilize the local currency against the major foreign currencies.

But the canker has resurfaced in recent times.
By Samuel Boadi