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The government has started the processing of domestic debts that fall due from the proceeds of the Eurobond issued last month. This follows the release of US$200 million, about GH�400 million, into the Consolidated Fund for use under items approved in the 2013 budget. Part of the GH�400 million transfer will go to finance various ongoing capital projects earmarked under the 2013 budgets or started in previous years to ensure their completion. The Minister of Finance and Economic Planning, Mr Seth Terkper, who disclosed this in an interview on September 9, stressed the government�s resolve to complete all projects in the pipeline before starting new ones. The projects cut across roads, rural electrification, agriculture, fisheries and a sea defence project. About 34 per cent of the proceeds have been earmarked to refinance maturing domestic debts. Since the Eurobond is long-term funds, its use to refinance short term debt instruments will help save the country the payment of high interest rates and therefore cushion the economy to realign towards firmer stability. Mr Terkper said the impact of the payments include the conversion benefits as most of the payments were cedi-denominated. Ten per cent of the Eurobond proceeds will be used as counterpart funding to trigger disbursements of some projects financed by multilateral and bilateral development partners. A total of 31 per cent will be directed towards funding projects under the 2013 budget. After the roadshow in July and early August, the government received a total of US$740 million into its foreign reserve account, net of US$250 million used to swap or early redemption of the US$750 million Eurobond of 2007 and issuing fees. Debt Profile The finance minister had earlier said that the country�s debt profile would change in favour of financing capital expenditures with domestic and international long-term debts. On August 22, the government issued a GH�100 million seven-year bond to finance capital projects, restructure debts and be used as benchmark instrument to court the development of the long-term end of the market. Reforms In an earlier interview, a Deputy Minister of Finance, Mr George Ricketts-Hagan, told the GRAPHIC BUSINESS that misalignment in the budget, arising from liquidity challenges posed by the huge public sector wage bill, had caused the Minister of Finance to lead a policy to correct the situation. He said ensuring that projects were financed only when there were dedicated funds as well as financing long-term capital projects from long-term funding sources would ensure that the country maintained a comfortable debt-to-GDP (Gross Domestic Product) so as not to make the economy relapse into debt unsustainability. �Things have not been done well in the past so it is time to bite the bullet to put things in order, else the time will come that we can�t pay wages without borrowing to do so and this is what the President and the Minister are bent on avoiding,� Mr Ricketts-Hagan, who is also the National Democratic Congress (NDC) Member of Parliament for Cape Coast South, indicated. He said there were a lot of budget, tax and revenue reforms going on that would streamline governments revenue and expenditure the financing of projects, saying that �reforms such as the Ghana Integrated Financial Management Information System (GIFMIS) is to link revenues to expenditure and the government and the minister are serious about this.� Mr Ricketts-Hagan explained that the policy to dedicate long-term funding to capital projects did not mean that the government would not borrow from the short end of the market anymore. �Since we are moving to the accrual-based public accounting system by capturing all government commitments at the centre, we need to instill discipline in the way the country�s finances are managed,� the deputy finance minister and MP for cape Coast South explained. The Ministry of Finance is implementing the composite budgeting approach, where it asks all ministries, departments and agencies to draw their budgets from district, municipal and metropolitan assembly levels.