BUDGET: Govt introduces unlisted securities market

Accra, Nov. 10, GNA - Government is to introduce an unlisted securities market on the Ghana Stock Exchange to enable indigenous Small and Medium Scale Enterprises (SMEs) to raise equity on the market to support their expansion programmes.

The unlisted securities market would also enable the SMEs to clean their balance sheets by replacing debts with equities, Finance Minister Kwadwo Baah-Wiredu, said when he presented the 2006 budget in Parliament on Thursday ahead of the beginning of the year.

"This will reduce their interest payments and boost profitability and growth in the SMEs," he said in a budget statement that also proposed the extension of the tax-exempt status of capital gains on the Ghana Stock Exchange by five years to the end of December 2010. "Further, Government will support the Ghana Stock Exchange to establish an Automated Trading Platform under the proposed Economic Management and Capacity Building Project."

The Minister said there already existed the Micro Finance and Small Loan Centre (MASLOC), an Apex body established in 2004 to oversee the administration, coordination and monitoring of small loans and the micro scheme.

Since its establishment, MASLOC had developed close working relationships with key MDAs, financial institutions and other stakeholders on recovery of credit facilities for the sub-sector, Mr Baah-Wiredu said, and added that the sub-sector activities 2006 would include the establishment of a fund to support Micro Finance activities and effective coordination through appropriate interventions and activities.

This would also include capacity building of key institutions, and provision of direct resources to specific projects with measurable indicators for employment and wealth creation.

On the development of capital markets, the Minister said government recognised the market's importance as the key medium for resource mobilisation for Private Sector Development and had therefore worked with stakeholders to provide the requisite infrastructure to support its development.

He said in pursuance of this objective, the Bank of Ghana had in consultation with the government been engaged in an effort to facilitate the development of the capital market to offer the private sector access to long-term sources of finance.

To begin with medium-term government securities (two and three-year fixed and floated rate bonds) have been floated. "These debt instruments will soon be listed on the Ghana Stock Exchange (GSE) to promote the development of the bond market," Mr Baah-Wiredu said.

Already Parliament has passed the Long-Term Savings Act, the setting up of the Venture Capital Fund and the development of modern payments and settlement system through under which the Real Time Gross Settlement (RTGS) System was introduced in 2002 and Payments System Bill was passed in 2003. The Central Securities Depository System was also established in 2004