Century bond to save Ghana from ‘hand to mouth’ existence – Ofori-Atta

The Minister of Finance, Ken Ofori-Atta, has defended government's plan to issue a $50 billion century bond in the coming weeks.

According to him, the move is to help Ghana overcome what he termed as “hand to mouth” trajectory, and put it on a firm path “of growth and prosperity.”

“The decision to raise these ultra-long-term bonds is not intended to derail our debts sustainability path, but rather to enhance it. If we really want to uplift ourselves out of this hand to-mouth existence and put our country Ghana on a firm trajectory of growth and prosperity, we will need to source long term affordable financing to invest in strategic infrastructure over the medium to long-term,” Ofori-Atta said when he presented the 2019 budget statement in Parliament today, Thursday.

Government has been criticized over its intentions of issuing the $50 billion 100-year bond to finance projects in Ghana after reports emerged that the money was to come from China.

Argentina, Austria and Mexico are said to have issued the rare bonds to finance their national projects.

Ofori-Atta explained that the New Patriotic Party inherited GH¢120 billion debt from the previous government “at very high interest rates”, adding that aside investing the century bond in capital projects, part of it will be used to “refinance these expensive liabilities.”

“We inherited over GH¢120 billion of debt at very high interest rates. Even though we have brought down interest rates considerably we are still saddled with a sizeable amount of expensive debt. As such, in 2019, we will spend over GH¢16 billion of our revenue (over 26.6%) on interest payments. This amount can be considerably reduced if we refinance our debt at much lower interest rates. A ten percent reduction in the interest rates translates into over GH¢1.6 billion in savings; almost enough to pay for Free SHS in 2019.”

“…The Ghana Century bond program will help provide us with the wherewithal to refinance these expensive liabilities. It is an important bulwark for Ghana's post IMF status; it indicates a country with a long-term plan, a country that can program its infrastructure needs, a country that can provide for adequate foreign exchange reserves,” he added.

The 2019 budget was themed “a stronger economy for jobs and prosperity.”

The Finance Minister touched on all sectors of the economy including agric, manufacturing, waste management, aviation among others.

He also briefed Parliament on government’s social intervention programmes including the free Senior High School programme, NABCO, one district one factory, planting for food jobs, adding that they also intend to introduce rearing for food in 2019.

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By: Godwin Akweiteh Allotey | citinewsroom.com | Ghana

Follow @AlloteyGodwin