The Finance Minister Ken Ofori-Atta says the government will return to the Eurobond market to borrow US$3billion to help the government bridge the deficit between its revenue and expenditure in 2020.
The government is projecting to raise GH¢67 billion in revenues and grants whereas its total expenditure for the year is pegged at GH¢86 billion — leaving a deficit of about GH¢19 billion which is equivalent to 4.7 percent of GDP.
The planned 2020 bond issuance will be the seventh time Ghana will be borrowing from the Eurobond market in the past eight years.
Ghana’s unwavering appetite for Eurobond comes at a time interest payment is fast approaching the biggest item on the government’s expenditure list.
This year alone, GH¢21.7 billion nearly 25 percent of government’s planned expenditure for 2020, will go into interest payment while the allocation for infrastructure development is only GH¢9.3 billion.
Government last issued Eurobond in March this year was a US$ 3 billion facility comprising of three tranches with average maturities of seven, 12 and 31 years. The shortest tranche was priced to yield 7.875 percent, after initial guidance of around 8 percent to 8.5 percent. The other tranches were priced at 8.125 percent and 8.95 percent.
Eurobond appetite
Ghana’s maiden Eurobond, a US$750 million bond, was issued in 2007 at a coupon rate of 8.5 percent and matures this year. Four other bonds were issued between 2013-2016, all receiving mixed reactions from the market.
The then Finance Minister Seth Terkper explained that Eurobonds usefulness to Ghana’s economic strategy cannot be in doubt as it falls in line with the ‘smart-borrowing’ agenda of the government and that the bonds are not any different from other borrowing means.