Ministry of Finance has dismissed claims by the Minority in Parliament that the recently issued Energy Sector bond required prior Parliamentary approval and has also caused financial loss to the state.
Deputy Minister of Finance, Kwaku Kwarteng, said because such financial instruments are strategic, parliamentary processes may delay it which could eventually affect the interest rate.
He further described as completely unnecessary, in bad taste and misinformed the press conference organized by the Minority on the issue.
“When you go to the bond market, you are not in a position to sit down and agree on a set of terms, take it Parliament, come back and you get those terms from the different investors. It’s not possible. We think that this press conference was completely unnecessary, bad taste and misinformed.
The Deputy Minister questioned the motive of the press conference, saying that during the tenure of the NDC no bond issue was brought to Parliament.
“In the eight of years of Rawlings, Mills/Mahama, they’ve never brought any bond issue to Parliament so why are they now asking why we did not take it to Parliament?”
Government issued a ten year and seven-year bond with the aim of getting GHc6 billion to offset the legacy debts of the energy sector, which was about GHc10 billion.
But in all, a total of GHc4.69 billion was realized even after a seven day extension period. The 7-year component raked in 2.4 billion cedis as targeted, at an interest rate of 19 percent. However, the 10 year bond failed to hit the 3.6 billion cedis mark.
The Minority in Parliament in a press conference on Wednesday, October 8 said the Energy Sector bond has caused financial loss to the state.
“The government could have saved up to 200 basis points if they had gone to the financial market on the strength of Government of Ghana ratings, rather than the ESLA PLC which is unrated and unknown. Simply put, the state could have saved 2% of 6 billion cedis times 10years, which is an equivalent of 1.2 billion cedis over the period. The government delegation has woefully caused financial loss to the state as a result of this gross incompetence.”
Mr Kwarteng in reaction to the press conference of the Minority said the New Patriotic Party government has a clear road-map on the bond going forward, and will not be forced to increase the interest rate.
“The NPP government is clear on what we are doing, we are not going to be pressured to give the kind of unhelpful and imprudent interest rates that we gave to investors. We will continue to engage and we are sure that at the end, we are going to get the money that we want,” he added.