Coronavirus: Opposition NDC wants government of Ghana to use $3 billion Eurobond for fight against the outbreak

Coronavirus: Opposition NDC wants government to use $3bn Eurobond for fight against the outbreak

Cassiel Ato Forson

The largest opposition party in Ghana, National Democratic Congress’ (NDC has asked the government to amend the proposed plan for the utilisation of the $3 billion Eurobond.

According to the party, the government should rather, use the fund to support the country’s fight against the coronavirus pandemic and related expenses.

A member of the NDC COVID-19 Technical Team, Cassiel Ato Forson, proposed the alternative funding strategy during a media encounter in Accra on Wednesday.

“We humbly appeal to the government to amend the proposed utilization of US$3 billion Eurobond proceeds to make funds available immediately to cater for the COVID-19 related expenses and the possible adverse economic shocks that may occur,” he noted.

Adding that “The proposed utilization plan for the 2020 Eurobond proceeds as originally presented to the Finance Committee of Parliament and later to the plenary for approval indicated that the proceeds were tied to three main expenditure items; budget support, restructuring of the energy sector, and liability management. The distribution of the proceeds according to the proposed utilization plan as submitted by the government to Parliament was at the exchange rate of US$5.72 to the cedi.”

Mr Forson also proposed a review of non-emergency expenditure in the budget for the same course.

He said, “In times of emergency, in economics and finance, we have something called reprogramming of development program. We wish to propose to reveal non-urgent expenditure in the 2020 budget so that funds will be made immediately available for the fight against COVID-19. Ghana has already recorded 68 cases and three deaths, unfortunately. These worrying developments require urgent and pragmatic measures to manage and contain the situation. The economic impact of the outbreak is likely to affect almost all sectors of the economy hence the need for immediate finding to minimize the effect of this outbreak.”

Background

In February 2020, Ghana became the first-ever country on the African continent to issue a 41-year bond, as the West African country successfully raised US$3 billion in the international debt capital markets.

The capital markets reaffirmed their increasing confidence in the Ghanaian economy when the West African country’s 2020 international bond issuance resulted in an order book five times the amount required on Tuesday, 4 February 2020.

This bond issuance comes two weeks after international rating agency Moody’s gave a resounding vote of confidence in the country’s economy with a positive outlook.

Following a three-day roadshow in a series of fixed-income investor meetings in New York, Boston and London, Ghana issued a second tri-tranche Eurobond transaction under its International Capital Markets Programme.

The transaction comprised $1.25 billion 6-year Weighted Average Life (WAL), $1 billion 14-year WAL and $750 million 41-year WAL priced at a coupon rate of 6.375%, 7.875% and 8.750% respectively.

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