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04.06.2004 Business & Finance

Govt To float Sovereign Bonds To Raise Funds

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The Government is considering the floatation of sovereign bonds to enable it to access funds from the international financial market to support national development at the end of the completion of the decision point of the Highly Indebted Poor Countries (HIPC) initiative this year.

The Minister of Finance and Economic Planning, Mr Yaw Osafo-Maafo, who made this known at a news conference in Accra, said “ the country could not survive only on bilateral and multilateral support, if it wanted to quicken its pace of development, hence the need for sovereign bonds”.

Sovereign bonds are bonds issued by national governments to raise money from private international financial organisations to support its development objectives.

Mr Osafo-Maafo, who was flanked by four sector ministers, namely Mr Alan Kyeremanten, Minister of Trade,Industry and President's Special Initiative, Dr Richard Anane, Minister of Roads, Dr Ameyaw Akumfi, Minister of Ports, Harbours and Railways and Dr Samuel Nii Noi Ashong, Minister of State at the Ministry of Finance and Economic Planning, noted that should the programme became successful, Ghana would be the first country, south of the Sahara after South Africa, to have been able to issue sovereign bonds.

The minster said the B+ rating attained by the country last year, qualified her to source funds from private institutions. Mr Osafo-Maafo, however, said that the HIPC intiative was a source of constraint to floating of sovereign bonds by countries that had subscribed to the initiative.

He said the country had been used to sourcing funds from bilateral and multilateral organisations and as such sourcing of funds from private financial institutions was a new phenomenon in the country.

“Government will go ahead to source funds from private financial institutions to complement the support from bilateral and multilateral agencies”, the minister said.

On the CNCTI loan agreement, Mr Osafo-Maafo noted that Parliament and the Finance Committee of Parliament had not been fairly treated and that “ they did a good job”.

He said government would go ahead with the process as indications were that the source of the loan was credible and the concession of the loan agreement was very attractive.

Mr Osafo-Maafo called on Ghanaians to be conscious of the way they commented on investments, adding that “ investment issues must be discussed in a more responsible manner”.

The minister dismissed allegations that government, in contracting the loan, would make upfront payment fees.

He, however, said in project financing or suppliers credit, management fees were applicable and that the management fee had been renegotiated from 4 per cent to 2.5 per cent.

Mr Osafo-Maafo assured Ghanaians that in sourcing the funds, government took into consideration the need to accelerate the infrastructural development of the economy in the interest of the nation.