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02.12.2014 Business & Finance

On The Matter Of The US$1Billion Eurobond: Bawumia Hits [email protected]’t Again

“Your Responses Are Poor”
By The Scandal Newspaper
On The Matter Of The US$1Billion Eurobond: Bawumia Hits Back@Gov’t Again
LISTEN DEC 2, 2014

Dr. Mahamudu Bawumia, a former Deputy Governor of the Bank of Ghana (BoG) has hit back at the government for its “poor responses” on how the USD1Billion Eurobond was utilized and has therefore called on the BoG to come clear with the full details.

In an interview with Scandal over the weekend, Dr. Bawumia expressed shock at the response by the government to his request madelast week and stated that “It is a simple question that demands a simple answer. Show us the projects and the amount of financing from the September Sovereign bond proceeds. How much of the Sovereign Bond has been used to reduce Government indebtedness at the Bank of Ghana in 2014?”

The Government secured $1 billion Eurobond only two months ago (September) to undertake specific projects but a Deputy Finance Minister, Ms Mona Quartey, has outlined some projects which proceeds from the Eurobond has been used to execute.

Indeed some of the projects mentioned by the Minister were started in 2010 and therefore predates discussions for the bonds.

“The Kasoa bypass is one: that is about 37 percent complete now. The Kwame Nkrumah Interchange…that is about 62 percent complete. The polo grounds bypass, about 92 percent; Ayamfuri…road, 36 percent of that has already been done”, the Minister disclosed last week, giving credence to the assertion by Dr. Bawumia.

Another Deputy Finance Minister, Ato Forson has also deepened the controversy over the use of the Eurobond as he has confirmed that a significant amount of the bonds was used to service debts, a claim made by Dr. Bawumia but sharply rejected by government officials.

"What we said is that we are going to use $250 million for capital expenditure, and to take another $300 million for counterpart and matching funds and also to use $200 million for maturing short time debts", Mr Ato Forson disclosed last week, to the chagrin of many Ghanaian tax payers.

Addressing a group of UK-based Ghanaian professionals at a breakfast meeting in London, the former Deputy Governor of the Bank of Ghana disclosed, he was“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.”

Rebutting the response by the government, Dr. Bawumia told Scandal that, he was“not impressed by answers that try to pull wool over the eyes of Ghanaians”,and further queried “If the September 2014 sovereign bond would be used to finance any projects in 2015”

“In the prospectus that sought to convince investors, 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?”, he asked further.

According to him, if the Sovereign bond would be used to finance projects next year, “then that expenditure should be in the 2015 budget”

Making a case fortransparent and accountable governance, Dr Bawumia averred that “in the interest of transparency, the Bank of Ghana should publish details of payments and transfers out of the September 2014 Sovereign Bond Account and the balance on the account for all to see. This is a very simple request for an account that is only two months old unless this Government has something to hide”.