Citi Business News has gathered that Metropolitan, Municipal and District Assembly’s quest to issue bonds on the Ghana Stock Exchange (GSE) may take a while.
This is because the law that will authorize them to issue the bonds to fund their medium and long term needs, has still not been sent to Parliament.
This means MMDA’s will have to continue to struggle to finance their projects using the same old sources of financing needs.
Speaking to Citi Business News, the Director General of the Securities and Exchange Commission (SEC), Dr. Adu Anane Antwi said the municipal bond can only be issued when Parliament passes a law which will determine the structure of borrowing on the GSE.
“The Municipal Finance Bill is yet to go to Parliament. I’m not even too sure if it has gone to cabinet for approval, so until the bill is passed into law, we cannot say municipal bonds are going to be issued.”
He added,“The bill is expected to give municipal authorities the power to borrow because the structure of the bill is that either they are going to establish a municipal authority which is going to do the borrowing on behalf of the municipalities or the bill will allow the municipalities to borrow themselves.”
But Dr. Adu Anane Antwi disclosed that the proponents of the bill are proposing that the borrowing should be done through the municipal financing authority.
“We have to wait for the final document which will give us headway when it comes out of parliament,” he said.
The Minister of Finance, Seth Terkper, last year hinted that government was to soon initiate municipal bonds issue to access funds from the capital market to meet the ever-mounting infrastructure obligations of Metropolitan, Municipal and District Assemblies.
The move is expected to provide cheap funds from the capital market to meet the ever-mounting infrastructure obligations of Metropolitan, Municipal and District Assemblies.
This would enable the ministry to source funds for the district assemblies for development projects without depending too much on the national budget.
This was to deal with the falling tax revenue, yawning budget deficit and the fiscal squeeze at the local level.
“Instituting a strong regulatory framework that will prevent Metropolitan, Municipal and District Assemblies (MMDAs) from engaging in multiple borrowing and incurring unsustainable debts which would ultimately be passed on to the central government is among the important challenges being addressed,” Seth Terpker stressed.
By: Norvan Acquah – Hayford/citibusnessnews.com/Ghana