If our bond was issued at 20% it would have been oversubscribed- Kwarteng hits back at Minority

Source: Ghana|Myjoyonline.com|Nathan Gadugah
Date: 8th-november-2017 Time:  6:53:09 pm

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Government has vehemently defended the vehicle it used in issuing an energy sector bond which has been undersubscribed.

Deputy Finance Minister Kweku Kwarteng said the ESLA PLC option adopted by government was secured and the amount raised would not add to Ghana’s burgeoning public debt.

He argued the bond was undersubscribed only because of the 19% rate at which it was offered to investors.

According to him, the investors were used to the rate of 24% to 26% which the erstwhile NDC government cheaply gave away.

If we had issued our bond at an interest rate of even 20%, it would have been oversubscribed, Kwarteng told Gifty Andoh Appiah on Joy FM’s Top Story.

He was commenting on the Minority claim that government has caused financial loss to the state as a result of the underperforming energy bond.

Government had issued a ¢6 billion cedi energy bond for ten years at a rate of 19%.

However, the bids raised was ¢1.45 billion short of what was targeted.

The Minority did not understand why the government decided to use the ESLA PLC option to issue the bond, a vehicle they claim was riskier.

They would rather the government of Ghana was used as a sovereign guarantee in raising the bond.

At a press conference the Minority was vehement in their criticism of government.

Former Deputy Finance and Agric Minister Fifi Kwetey said “it is time for government to start eating humble pie.”

Fifi Kwetey

He said for a finance minister who claimed to have a global acclaim, it should have been easy for him and the government to raise a ¢6 billion bond with little or no hitch.

He said at no point did the NDC government fail to meet their bond targets

“If they cannot raise the money they want to raise then it’s a problem. In spite of the fine words the centre cannot hold,” he suggested.

They are struggling with revenue; they removed the taxes; growth is not happening, the only growth is what the NDC has done, Kwetey jabbed the government.

MP for Bolga Central Albert Adongo likened the bond issue to a pyram and Ponzi scheme.

He said it was quite surprising that a government which claimed to have raised proceeds of $2.25 billion bond in four hours could not raise ¢6 billion bond after many road shows which lasted over a month.

Adongo told Joy News government ought to have issued the bond in the name of government of Ghana and not a private entity the ESLA PLC.

He did not understand why funds must be raised in the name of a company not known to Parliament.

He said how can investors be assured of getting their monies if there are no guarantees other than letter heads of a private entity ESLA group?

In a response, Deputy Finance Minister explained a bond is a piece of paper given to investors in return for money for business activities.

He said government was confronted with using government’s sovereign guarantee as a collateral for the bond or to use a private vehicle-the ESLA PLC.

Kwarteng explained that government did not want a ballooning public debt and therefore decided to opt for the ESLA PLC option.

If the sovereign guarantee had been used the amount raised would have been added to Ghana’s public debt.

He was convinced the vehicle used was the appropriate one under the circumstances.

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