Brexit is wrong timing for Eurobonds in UK – Economist

A lecturer at the University of Ghana Business School, Dr. Lord Mensah believes Finance Minister Seth Terkper should be worried about raising external funding to support the country's budget following Britain's exit from the European Union.

“For now, I think we need to be a bit slow considering the timing of going to the market to raise money…The Finance Minister has a cause to worry if he is looking at raising external funds to support our budget,” he stated.

Dr. Mensah insists the timing is unfavorable for such a huge step considering recent developments surrounding Britain's exit.

Finance Minister, Seth Terkper has stated that the country is carefully observing emerging markets away from Europe and the United States for its upcoming bond issue as Britain exits from the European Union(EU).

According to him, with Ghana's experience in the core matured markets, the exit of Britain from the EU will have an effect on the European and American bonds markets; hence it will be prudent to study other markets to maximize Ghana's output.

Dr Lord Mensah who was contributing to discussions at the first edition of the Citibusinessnews.com Breakfast Encounters, yesterday, also emphasized that the Brexit move has rendered majority of investors in the UK reluctant to invest in other countries.

As a result, he contends that investors may not grant the best deals nor fully collaborate for fear of getting sidelined or rolled over at a point.

“As an investor, you always want to ensure that you have a safe haven for your money and I presume that going out there to raise funds is going to be quite difficult on this market because investors will like to be sure as far as the market is concerned before they put in their money in any environment that they choose,”

“UK's investors are a bit reluctant now to put their money in markets because of what has happened and we could see it clearly on the plummeting of the financial indicators,” He further noted.

Seth Terkper 'eyes' emerging markets
Speaking on the Citi Breakfast Show moments after the announcement of the exit in June, Mr. Terkper explained that the effect of the Brexit will have insignificant impact on the emerging markets hence the decision to consider them in raising the government's bonds.

“Ghana is on the peripheral of the emerging markets and so to come from the core markets which is the matured European and American markets to the emerging markets the impact of Brexit will be felt and is normally less significant in the peripheral markets”, he said.

The Minister was also of the opinion that, the exit of Britain is more important on how it will impact Ghana's currency.

He however stated that discussions are underway with the Bank of Ghana to assess the impact on Ghana's major trading currencies such as the pound, euro and dollar.

“We have begun consultation with the Bank of Ghana long before the votes, to monitor the impact on commodity prices,” he added.

–
By: Jessica Ayorkor Aryee/citibusinessnews.com/Ghana