THE Minister of Finance, Mr Ken Ofori- Atta, has said that the possibility of the country subscribing to the century bond is not off the table.
He said the ministry was still working with the market to see if they were interested in such a longer tenure bond.
In an interview with Bloomberg, which was monitored by the GRAPHIC BUSINESS after the successful US$3 billion Eurobond issuance, he said: “I don’t think anything is off the table for good because really the issue is the market has told us that they are comfortable with 31 years.”
“We have a lot of restructuring that we have to do in terms of infrastructure so we will work with the market to see whether they are interested in a much longer tenure bond,” he stated.
Mr Ofori-Atta in the 2019 budget revealed plans by the government to raise up to US$50 billion from the issuance of a 100- year bond to uplift the country and the citizenry from the “hand-to-mouth existence.”
Endorsement of govt policies
Regarding the success of the US$3 billion bond, he said that was overwhelming for the country because it signaled an endorsement from the investor community in the policies of the government.
“We have successfully concluded the IMF programme so the market in our minds has overwhelmingly endorsed the policies we have gone through the past two years and are comfortable that going forward the country is in a good position to do well,” he stated.
“Essentially, we came out for US$3 billion in three tranches of seven years, 12 years and 31 years and amazingly all of those were oversubscribed. At some point, we got US$22 billion and ended up at US$19.9 billion, in which we closed with US$3 billion,” he added.
Possibility of coming back to the market
With this kind of appetite for the country’s bonds, when asked if the government would consider coming back to the market in 2019, Mr Ofori-Atta said that decision would be taken during the mid-year budget review.
“Right now, we are comfortable with what we have done, we understand the market sentiment but we usually have mid-year reviews and that is when we will make a decision on whether to come back to the market or not,” he noted.
“We have some financial restructuring that we have to do with the microfinance institutions and Special Deposits-Taking institutions such as savings and loans and that has to be catered for in the budget and we will see how we finance those,” he added.
Answering a question on whether the recent policy cut by the Bank of Ghana was a mistake and the reason for the depreciation of the cedi, the Finance Minister said the policy cut could not be a mistake.
“Our central bank has been quiet clear about protecting the domestic environment and the inflation targeting regime always calls for a balance. It is true that the markets were stronger outside and which means that people may look to externalise but actually the fundamentals have been strong,” he explained.
“This pressure is as a result of what we call speculative bubble and the issues that came to bear was Ghana was leaving the IMF and there was certain amount of cynicism from that and a few bond holders wanted to externalise their dividends,” he added.
Going alone without the IMF
Mr Ofori-Atta also pointed out that although the country had made it clear its intention of building an economy beyond aid, it would continue to engage the Bretton Woods institution as a trusted advisor.
“We have had a great relationship these two years with the IMF and so we move back to article four which is now a 12- month review in which they come in every six months.
We have also established an economic coordinating committee, which includes members from the IMF, so the sense of the IMF as a trusted advisor is something that we will go with, only that there will be no money at the end of the table,” he stated.