The Member of Parliament (MP) for Bolga Central, Mr Isaac Adongo, has accused the government of sole-sourcing about GH¢21.5 billion of its bonds in 2017.
He said although the country had adequate time to go to the market to bargain for the cheapest source for those funds, the Ministry of Finance chose to create an emergency to be able to raise them from a single entity within a day.
That, he said, denied the country the opportunity of getting a fair rate.
Giving details in an interview with the GRAPHIC BUSINESS, Mr Adongo indicated that his analyses showed that in the third week of September last year, the government went on the bond market and used one day to issue GH¢3 billion on a tap issue that was not on the issuance calendar.
“On October 7, 2016, the Minister of Finance sent a letter to the Bank of Ghana to issue a bond and three days later, he came again that the government wanted to sole-source GH¢2.8 billion which was not on the calendar,” he stated.
“In November, the government came again outside the issuance calendar and raised GH¢5.5 billion sole-sourced loans,” he added.
Worrying trend
Mr Adongo described the happenings as “very worrying,” especially when it was done deliberately.
“How is it possible that the issuance calendar, which is the source of advertisement and marketing of government securities, are issued with the Minister of Finance apparently not aware of exactly how much the country needs,” he asked.
“The minister is aware of the country’s debt and their maturity profile. The Ghana debt statistics report published on the ministry’s own website shows you the percentage of debt that were due to mature in 2017, so you already know all your debts that will mature in 2017 and nothing is a surprise,” he said.
“So, if you want to re-profile your debt, you are aware of how much you need and how much you need to support your budget yet, when programming how much the country needs, the government pretends it does not know. It issues a calendar and somewhere along the line, it comes in to do a tap. You come and sole-source loans under an emergency arrangement as though you did not know you needed that money,” he added.
Financial management
The MP also alleged that the financial management of the country was now being run on a crisis basis, as the country no longer had the adequate time to look for cheaper sources of funding.
“Our loans are now being sole-sourced under emergency situations and as a result, the 19.5 percent that they raised in March has become the benchmark interest rate up to date, although inflation is on a downward trend,” he pointed out.
“What has been the impact of the improved economic fundamentals if we are still borrowing at the same rate?” he asked.
Source: Daily Graphic
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