According to the Minority spokesperson on Finance, Cassiel Ato Forson, government spent GHc87 million on administrative expenses, as well as GHc400, 000 on the printing of material for the energy bond roadshow.

His latest comment follows a press conference the Minority held on Wednesday where they alleged among others that the bond issue was a failure.

[contextly_sidebar id=”j1jr1xCyglAy9VtEEq4GhxedHsAfzNTL”]They also at the press conference accused the Akufo-Addo government of causing financial loss to the state, and requested that the Finance Minister Ken Ofori-Atta be hauled before Parliament.

Speaking with the press in Parliament today [Thursday], Ato Forson, who is also the Member of Parliament for the Ajumako-Enyan-Essiam constituency, said the expenditure amounts to reckless spending.

“From the cost that I have that the taxpayer is paying; the state is paying the arrangers, the banks, GHc87.5 million. The state is paying legal fees of GHc700, 000; the state is paying the accountant, GHc350, 000. Surprisingly, the state is paying administrative expenses of GHc80 million. Overall the state is paying GHc177 million. I think this amount is way too much.”

Mr. Ato Forson argued that, when the $1 billion Eurobond was issued under John Mahama’s administration, the amount spent was way lower than what the current administration is spending.

“This is not the first time the state is raising a bond. The last bond we raised under the Eurobond of $1 billion which translates to about GHc4.4 billion, the total cost was under 0.2 percent. Today, we are seeing a bond that we are raising for about 4 billion and the cost is about 1.77 percent.

He further said the Minister of Finance will be hauled before Parliament to give the actual breakdown of expenses for the energy bond since they suspect wrongdoing.

“I think it is important that we ask questions. So the question we are asking is that we want the Ministry of Finance to provide the state with further and better particulars. We are asking for full breakdown of what constituted the administrative expenses. Printing of the road show material was GHc400, 000. We are going to haul the Minister before Parliament, to give us full breakdown to account for every cedi that has been spent so far. We think it is way too much and we smell something fishy,” he added.

Background

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 at a press conference on Wednesday made a litany of accusations against government, saying several wise counsel was ignored.

They also accused government of breaching the constitution because they did not seek the approval of Parliament before issuing the bond.

Minority presser on energy bond unnecessary, misleading – Kwaku Kwarteng

But a Deputy Minister of Finance, Kwaku Kwarteng, whilst speaking on the Citi Breakfast Show on Thursday, said the press conference organised by the Minority was unnecessary.

“We think that this press conference was completely unnecessary, bad taste and misinformed,” he added.

Energy bond struggled due to low interest rate – Finance Ministry

He however clarified that, government’s failure to achieve its targeted GHc10 billion lump sum after issuing the bond, was largely because investors considered the interest rate unfavourable.

Mr. Kwaku Kwarteng noted that investors were not happy with the 19% promised them, and had asked for more, but government was not willing to offer anything beyond 20%.

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By: Godwin Akweiteh Allotey & Duke Mensah Opoku/citifmonline.com/Ghana
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The post Gov’t blew GHc177m on ‘failed’ energy bond – Minority appeared first on Citi 97.3 FM - Relevant Radio. Always.

Per their calculations, the loss is up to the tune of 330 million dollars per year over the next fifteen years.

[contextly_sidebar id=”Kzs9CAMAFjNAyG3ZAMgZfGtQIfU7TgTn”]According to the Minority Spokesperson on Finance, Cassiel Ato Forson, the difference between the rate of the bond and that of the current treasury bill rate is the cause of the huge amount of money the country is allegedly losing through the deal.

These comments follow recent actions taken by the minority for disclosure on the terms of the bond including a petition to the United States Securities and Exchange Commission.

Addressing the media, Cassiel Ato Forson said: “It will surprise you to know that, the use of proceeds as the Minister of Finance made it known to the public was categorical. He said the proceeds will be used for the purposes of switching short-term domestic instruments. And when we say short-term domestic instruments, we are making reference to 98 days treasury bonds and 192 days treasury bonds. Currently, treasury bonds as at 17th of April, is traded at 16.35%, and 182 days treasury bonds is traded at 16.70%, but what surprises me is that, the Finance Minister decided to go for a long-term debt of 19.5 % to switch off a debt of 16.35%. In fact, his actions are woefully causing financial loss to the state. From the calculations, it is clear that Ghana will be better off if we had decided to roll over the existing treasury bonds which is being traded at 16.35%, instead of going for 19.75 percent. From the calculations, Ghana would have been better off with $330 million US dollars if he had not decided to go on this tangent.”

Early on, Parliament passed a half hour motion to compel the Minister of Finance to provide detailed information on the recent 2.25 billion dollar bond issued by Government.

The Minister has seven days to respond to the motion.

The motion was filed by the Minority Leader, with a request for the full complement of documentation related to the issuance, the participants, the utilization of proceeds and the currency in which the bond was settled.

The Minority Leader, Haruna Iddrisu, moved the motion on the floor of Parliament.

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By: Marian Ansah & Duke Opoku Mensah/citifmonline.com/Ghana

The post Ghana to lose $ 330m yearly over $2.25bn bond – Minority appeared first on Citi 97.3 FM - Relevant Radio. Always.

The Minority at a recent press conference accused the Minister of Finance, Ken Ofori-Atta of conflict of interest, for allegedly selling the $2.25 billion domestic bond to his cronies.

[contextly_sidebar id=”MekCm4gWEWGsaxdtMpFsLRN24dP8eSQU”]But Dr. Bawumia speaking to media at the IMF/World Bank Spring Meeting in Washington, described the Minority as ignorant for criticizing government over the bond.

A statement signed by the Deputy Ranking Member on Employment, Richard Quashigah, described the Vice President’s statement as “jaundiced.”

“If indeed those were his words, then it is not only unfortunate, but a very jaundiced conclusion to have been made by him,” Mr. Quashigah said.

Mr. Quashigah in the statement further cautioned Dr. Bawumia to be mindful of his comments saying his words could cause Ghana an international embarrassment.

“If indeed the reportage as put out by the media is accurate, then he is advised to learn to speak with diplomacy and dignity expected of a Vice President or else before long he could cause this nation an incalculable international embarrassment. Assuming without admitting that the minority got it wrong, couldn’t he have clarified without insults?”

He further called the Vice President to do the honourable thing by apologizing.

“Mr. Bawumia, the current Vice President of Ghana, must do the excellent thing by withdrawing and must apologize to the good people of Ghana. The use of intemperate language is unbecoming of the Vice President,” the statement added.

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By: Godwin Akweiteh Allotey/citifmonline.com/Ghana
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The post Apologize for calling us ‘ignorant’ – Quashigah to Bawumia appeared first on Citi 97.3 FM - Relevant Radio. Always.

The Minority group in parliament, led by a former Deputy Finance Minister, Mr. Cassiel Ato Forson alleged that the issuance was done in secrecy, denying other investors an opportunity to participate in the bond.

The Minority further alleged that the transaction was “cooked” to favor a particular investor ,Franklin Templeton, while the transaction did not receive parliamentary approval.

But responding in a press release copied to Citi Business News, the Ministry of Finance lashed out that “Hon Cassiel Ato Forson, a former Deputy Finance Minister, knows very well the workings and processes for the issue of domestic bonds and as such, should not be making such baseless allegations”.

“The allegations are maliciously designed to malign and negate the positive news and rave reviews this landmark transaction has garnered, both locally and internationally,” it said.

Response

In their response, the Ministry explained that “the issuance was not shrouded in secrecy nor was it “cooked” for any particular investor”.

“The Bookrunners, (Barclays, Stanbic and SAS), on behalf of the Ministry of Finance have been mandated since 2015 to issue these domestic bonds on a regular basis as per the debt issuance calendar which Ministry of Finance (MoF) puts out every quarter”.

“Also the book runners announce and publish every impending bond issue to the market, the week of issue and provide price guidance to the market. This particular bond issue was no different and was done in conformity with the established process. It was announced by the Book Runners to the market on March 30, via email and same published on MoF and Bank of Ghana (BoG) websites with settlement on April 3,” the statement said.

It  rebutted that FT was not the only participant, as there were over 25 other buyers including other foreign entities, who all brought in dollars to convert to cedis to buy the bonds.

“This bond issue, like all the others done prior could not have been designed to favour any single investor. The conventional processes for the issue of bonds using the book building approach were adhered to in this particular issuance. It is our understanding that the said investor engaged various market participants and other key institutions including the IMF before deciding to participate in the bonds. It is worth noting that local investors also participated”.

It clarified that the said investor participated in the issuance in the manner they have always done since 2006 through their local Primary Dealer, Barclays Bank and their local custodians, Standard Chartered Bank and Stanbic Bank.

“To have obtained preferential treatment, all the above mentioned institutions would have had to conspire to do so, a situation which is unfathomable.  The investor in question, FT, has held Government of Ghana bonds of up to USD 2 Billion prior to this transaction. Indeed FT has been buying and investing in government bonds since 2006,” it argued.

On the issue of parliamentary approval, the statement maintained that this issuance, like all other domestic bonds issued under this bond program since 2015, did not require Parliamentary approval.

“Approval was given under the initial application to Parliament in the 2015 Budget Statement and Economic Policy document, to run such a bond issuance program.  The Ministry of Finance has the mandate to fund the deficit as contained in the budget approved by Parliament through the issuance of debt instruments and to manage the countries debt stock”.

Impact of Transaction

The statement  justified that the issuance brought in significant amount of foreign currency, which was converted into cedis to purchase the bond, helping to strengthen the value of the Cedi and providing much-needed respite for the citizens of Ghana.

It added that “the transaction will also lengthen the maturity periods of government debts thereby reducing the short term redemption and rollover pressures on government”.

According to the statement, the proceeds from the bond issue are to be used for liability management and for the re-profiling of our domestic debt stock by repaying more expensive short-term debt as it matures, as such it shall not add to the total debt stock of the nation.

“This deal is a positive move in the current debt management strategy being pursued by government and should be applauded”.

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By: Lawrence Segbefia/citibusinessnews.com/Ghana

The post Attacks on $ 2.25bn bond baseless- Ministry of Finance appeared first on Citi 97.3 FM - Relevant Radio. Always.