Gov’t Lied Over $1bn Eurobond

Dr Anthony Akoto Osei
The Minority New Patriotic Party (NPP) in Parliament yesterday confirmed that the government had misapplied the $1 billion Eurobond secured in September this year by using it to defray part of its domestic debt.

According to the Minority, the $1 billion Eurobond was intended to be used to finance some important capital projects in the country but the government, realising the effects of its over-borrowing from the Bank of Ghana, had used the money to pay its huge indebtedness to the Bank.

The Minority Spokesperson on Finance, Dr Anthony Akoto Osei, told journalists at a press conference in Accra yesterday that data retrieved from the monetary account of the Bank of Ghana's website—copies of which were made available to them (journalists)—indicates that the money had already hit the sovereign bond account and used to defray government's indebtedness to the bank.

Dr Akoto Osei doubted the sincerity of the government in the application of the $1 billion Eurobond, especially when the Finance Minister, Seth Terkper, had said that $800 million of the money was in an account in a US bank.

According to the Minority, as at the end of August this year, government had borrowed a whopping GH¢10.6 billion from the Bank of Ghana   which was in breach of the bank's Act, 2002 Section 30(b), which stipulates that the bank cannot give loan or credit to the government totalling more than 10 percent of government's tax revenue for the fiscal year under review which in this case far exceeds that cap.

“The data from the Bank of Ghana shows that Bank of Ghana's net credit to government increased from GH¢5.3 billion at the end of December 2013 to GH¢10.6 billion by August 2014, representing an increase of GH¢5.3 billion. The massive extension of credit to the government by the Bank of Ghana represented a breach of the Bank of Ghana Act, 2002 and the criterion established by the six countries in the West Africa Monetary Zone,” he said, adding that that was the reason why the government was refusing to tell Ghanaians what the proceeds of the September 2014 Sovereign bond had been used for as it rightly came to Parliament to seek before parliamentary approval was given.

“We have caught them red-handed. The money had been swallowed by the Bank of Ghana as a result of government's huge indebtedness to it as against the reasons for which parliamentary approval was sought for the $1 billion Eurobond to be issued,” the Minority spokesperson said.

Dr Akoto Osei explained to journalists that the implications of what the government had done were far-reaching and could seriously affect foreign investor confidence, while the people of the country had been deprived of projects which the sovereign bond proceeds were to be used for.

“Ghanaians would be deprived of the benefits of the much-needed development while facing the additional burden of repaying the debt,” he indicated.

He said now that the Eurobond money had been misapplied, most of the capital projects including the Kasoa interchange, were going to be at standstill.

The issue of the $1 billion Eurobond was raised by the vice presidential candidate of the NPP, Dr Mahamudu Bawumia, who challenged the government to tell Ghanaians what the money had been used for.

Dr Bawumia, former Deputy Governor of the Bank of Ghana until the 2008 general elections, may therefore have credible sources within the bank to give information on the misapplication of the Eurobond or might have also done his own independent research to find out what the money had been used for.

After the NPP vice presidential candidate had challenged the government to reveal where the money is and what it had been used for, Mr Seth Terkper came out and said $800 million of that money was sitting intact in a bank in New York, USA.

His two deputy ministers contradicted themselves in relation to the whereabouts of the Eurobond, saying that the money was being used to pay for infrastructure development that the government had prioritised, with some of them (infrastructure) mentioned as the Kasoa bypass road which is 37 percent complete, the Kwame Nkrumah Interchange which is about 62 percent complete, the Polo Gounds bypass which is about 92 percent complete and the Ayamfuri road in the Central Region.