$2.25Bn Domestic Bond was not shrouded in secrecy – Minister

280 total views, 1 views today

Finance Minister, Mr. Ken Ofori-Atta, has dispelled allegations that the US$ 2.25 domestic bond issued earlier this year was shrouded in secrecy and fraught with corruption.

He was speaking on the floor of Parliament in Accra yesterday in response to a half hour motion moved by the Minority Leader, Mr. Haruna Iddrisu, a week ago.

Mr. Ofori Atta was summoned by the Speaker, Professor Aaron Mike Oquaye, to respond to the motion in connection with the seven and fifteen years bonds which combines to the tune of GHC 9.7 billion (US$ 2.25 billion).

The Minority Leader moved the motion to prevail on the Finance Minister to provide detailed information on the bond including the full complement of issuance, participants, utilization of the proceeds of the bond and the currency in which it was issued.

“Like our previous bonds, these bonds were issued in a competitive and transparent bidding process, managed by our Joint Book Runners, namely Barclays, Stanbic,” Mr. Ofori-Atta told a near full House.

According to him, government securities, globally, are issued in a manner that is distinct from other forms of borrowing and that there were elaborate rules that govern the issuance of bonds.

“Mr. Speaker, let me assure this august House that the Ministry of Finance did not deviate from those rules in issuing the bonds. The rules and procedures regarding issuance of bonds remain the same.

“Nothing was changed for the recent bond…..the only thing that has changed, perhaps, is the greater confidence that investors appear to  have in the capacity of the current managers of the economy,” he said to cheers from the majority side of Parliament.

On the currency that the bond was issued, Mr. Ofori-Atta emphasized that it was a Cedi denominated adding that the advantage of opening it up to foreign investors is that “they bring their hard currency to purchase the bond in our local currency. This has the positive impact of helping strengthen the Cedi.”

Regarding participants in the process, the Finance Minister said his outfit dealt with only Financial Institutions licensed by the Securities and Exchange Commission to deal in securities, and authorized by the Bank of Ghana as primary dealers to act as transactional advisors.

“The Ministry of Finance, in the issue of the bonds in question, had no direct dealing with investors. All prospective investors bid through the Primary Dealers, who, in turn, submit their investor’s bids through the Central Securities Depository platform,” he explained.

The bond participants, Mr. Ofori-Atta said, are no strangers to Ghana’s bond market, and as a matter of records have invested in local bonds over the last decade.

Speaking to how the proceeds from the bond  was utilized, Mr. Ofori-Atta stated that about GHC 2.25 billion has been used to re-profile the debt and GHC 1.1 billion used to finance the budget……..”we will continue to use the remaining amount to re-profile short term maturing bills.”

He said contrary to claims by the Minority that the deal was costing the country financially, Mr. Ofori-Atta said the expected savings from the transaction in respect of the interest cost is estimated at GHC 612 million in 2017.

“This clearly shows the financial savings we have accrued to government. In other words, we borrowed not to increase our debt stock but rather to decrease the cost of servicing pre-existing debts,” he stressed.

On allegations that the bond was not advertised, the Finance Minister said it was part of the issuance calendar for the second quarter, consistent with the 2017 budget financing plan.

“We have nothing to hide for we are committed to processes that will enure to the benefit of Ghanaians” he concluded to a standing ovation from the Majority.

Signaling that the Minority would go and peruse the documents presented by the Minister in relation to the bond and make public their next line of action, Mr. Iddrisu said the deal lacked credibility because the SEC which sanctioned the  move at the time had no board to do so.

He said the Minister was not being frank with Ghanaians when he said the bond, which is said to have been issues in cedis, had strengthened Ghana’s current account and build its international reserves.

The controversial bond is currently under investigations by Ghana’s Commission on Human Rights and Administrative Justice (CHRAJ) over possible conflict of interest and the Securities and Exchange Commission of the United States of America.

Source: ghananewsonline.com.gh

Ghana News Online

The primary function of GhanaNewsOnline.com.gh is to gather, process and distribute news about Ghana and Africa to the World. To serve as a News Agency with the mandate to present complete, in-depth objective and impartial information, news, and features rooted in investigative journalism.

Leave a Reply

Your e-mail address will not be published. Required fields are marked *