The Minister of Finance, Mr Seth Terkper, has said the government’s quest to raise a $1.5 billion Eurobond, subject to market conditions from investors, is on course.
Towards that end, a government delegation, led by the minister and the Governor of the Bank of Ghana (BoG), Mr Henry Kofi Wampah, has over the past one week met with investors in London, San Francisco, Los Angeles, Boston and New York.
A statement issued by the minister said investors were updated on Ghana’s significant progress towards fiscal consolidation and the continued support provided by the International Monetary Fund (IMF), the World Bank Group and other development partners.
Parliamentary approval
Parliament in July approved a request by the government to raise $1.5 billion from the European Bond Market to manage Ghana’s liabilities and support the 2015 budget.
Out of that amount, one billion dollars would be used to finance the 2015 budget to reduce the reliance on short-term expensive domestic debts, and the remaining $500 million would go into refinancing domestic and external debts.
Information available to the Daily Graphic indicates that the commencement of the roadshow had been fraught with some challenges due to prevailing market conditions.
Militating factors
The rather adverse news emanating from the financial market has been a major challenge to the roadshow.
That has been aggravated by the long time it is taking for the United States Federal Reserve to take a decision on a rate increase.
Contrary to expectations that the Central Bank of the US would increase the rate, it held it constant at a recent meeting.
Another militating factor, according to financial analysts, has been the slowdown from other emerging countries such as Brazil, Turkey and Russia, leading to sovereign bonds from those countries not performing well in the capital market.
They said, clearly, the general longstanding slowdown in commodity prices, in particular, crude oil which has led to significant slowdown in economic activities in oil-producing countries had not helped the situation.
“In relation to Africa, the fall in crude oil price, in addition to the fall in the prices of other commodities such as gold, cocoa and copper has seen significant adverse economic effects for countries such as South Africa, Nigeria, Angola and Ghana.
The turmoil that has hit the stock exchanges beginning with Shanghai, China, has resulted in a significant drop in the prices of equity or shares on the various stock exchanges,” the analysts added.
But they explained that the prospects look good as the Eurobond was oversubscribed in 2014 even under a bleak global economic outlook, saying that Ghana would surmount the challenges again this year.
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