Apaak sues to stop issuance of bonds without Parliamentary approval

The Member of Parliament for Builsa South, Dr. Clement Apaak, has filed an application at the Supreme Court demanding an injunction on the issuance of any further bonds without Parliamentary approval.

The MP argues that government's over-$2billion in bonds issued so far were essentially loans and were agreed to without Parliament's approval, thus breaching of the Constitution, and hence must be nullified.

Documents sighted by Citi News indicate that Dr. Apaak is seeking “a declaration that upon a true and proper interpretation of the Constitution, particularly Articles 181(1),(2),(3),(4) and (6) thereof and section 56 of the Public Financial Management Act 2016 (Act 921), the 7 and 15 year bonds issued by the government of Ghana raising a total amount of USD 1.12 billion in or about April 2017 constitutes a loan and accordingly are unconstitutional, null and void for lack of parliamentary approval.”

He is also seeking a declaration that “any liability or obligation imposed on the Republic of Ghana by reason of the said bonds is/are unconstitutional” and a further order of “perpetual injunction restraining the government of Ghana from issuing bonds without the approval of the Parliament of Ghana.”

In April 2017, the government announced it was successful in the auction of a total of $2.25 billion in four bonds.

The first two bonds, totaling $1.13 billion dollars were issued at 15 and 7 years, with the same coupon of 19.75%.

In addition, the Ministry of Finance raised the cedi equivalent of USD1.12 billion in 5 and 10-year bonds via a tap-in arrangement.

These issuances represented the largest amount issued by a sub-Saharan African country in a day. The pricing obtained was also consistent with the initial price range of 18.95% – 19.85%.

The bonds attracted a number of global portfolio investors including a very substantial investment in the 15-year bond by a very well respected global financial investor.

The Minister of Finance, Ken Ofori-Atta, has stated that the proceeds will be used to repurchase and/or retire a portion of the higher coupon short-term public debt instruments, explaining that there will not be an overall increase in the total debt stock.

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By: Delali Adogla-Bessa/citifmonline.com/Ghana