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17.10.2007 Business & Finance

Success of sovereign bond depends on fiscal discipline

By daily Express- Samuel COLEMAN

The access of the international capital market by Ghana which yielded the historic issue of the first $750 million sovereign bond from sub-Saharan Africa requires fiscal and monetary discipline to ensure that the bond is able to turnaround and maximize lots of benefit and be able to repay the seed money.

Speaking to the dailyEXPRESS after a press conference organized by the Ministry of Finance, Yofi Grant, Executive Director of Databank Financial Services said a strong fiscal discipline is needed to maintain the benefit and be able to repay the bond.

He said further that “over the last 5 years government has maintained a strict fiscal and monetary policy frame work and that has enabled them to borrow what they can pay for and spend what they have. It is therefore important that we get our discipline right and make it essential.”

Mr. Grant also mentioned that a stable macroeconomic environment and the right investment projects which are self financing and extinguishing must be ensured to get the necessary returns from the bond.

The private sector he added is very strong to partner government to foster accelerated growth because businessmen respond to opportunities and underdeveloped countries offer huge potential for investment opportunities.

The Finance Minister at his briefing said good policies for macroeconomic stability, debt sustainability, management of fiscal deficit, low inflation and exchange rate stability to pursue accelerated growth are key ingredients for the success of the bond.

Deputy Governor of the Central Bank Dr. Mohammed Bawumia pointed out the fact that “we need to get more than $750 million worth of projects on the ground to turnaround the money therefore policies and fiscal discipline must be right.”

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