MINORITY WANTS OFORI-ATTA SUMMONED OVER 'RECKLESS CONDUCT' IN ENERGY BOND

Minority wants Ofori-Atta summoned over 'reckless conduct' in Energy Bond

Source: Ghana|Myjoyonline.com | Abubakar Ibrahim
Date: 8th-november-2017 Time:  5:33:27 pm

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The Minority in Parliament has accused the Akufo-Addo administration of causing financial loss to the state with the recent issuance of the Energy Sector Bond.

They want the Finance Minister, Ken Ofori-Atta to be hauled before the House to explain why the latest bond issuance did not get the desired amount.

According to them, Mr Ofori-Atta ignored investment advice from the IMF among others, resulting in the underwhelming GH¢6 billion yield of the bond.

At a press conference in Parliament, Wednesday, Minority Spokesperson on Finance, Cassiel Ato Forson, said the complex structure of the bond coupled with government's unrealistic assumptions, caused the failure of the bond.

Lead managers of Ghana’s energy bond were not able to raise the entire amount targeted for the 10-year ESLA paper which closed last Friday.

JoyBusiness understands that managers got GH¢2.79 billion worth of bids from investors, but accepted GH¢2.29 billion as against a target of GH¢3.6 billion.

The results showed that the amount raised for the 10-year ESLA paper was about GH¢1.4 billion short of what was targeted. The managers, according to sources accepted to pay investors an interest of 19.5 percent over the next ten years on the ESLA paper issued.

This will translate into about GH¢456 million being paid every year, however, the amount would reduce to GH¢312 million and ¢156 million in the 9th and 10th year. 

In reaction to this, Mr Forson said, “instead of them issuing a bond called plain vanilla, they decided to use this complex structure that has caused the taxpayer some 200 basis points."

The 200 basis marks about two percent of theGH¢6 billion sought, amounting to about GH¢1.2 million, which he noted “can help the government to finance the Free SHS that they are struggling to settle.

The former Deputy Finance Minister said, “if they had gone to the financial market on the strength of government of Ghana ratings, rather than the ESLA PLC which is unrated and unknown,” government could have saved the aforementioned 200 basis points.

On that basis, he blames government delegation in charge of the bond for woefully causing financial loss to the state as a result of their gross incompetence.

“Because of someone’s gross incompetence, the state is losing GH¢1.2 billion over a 10-year period,” he said.

For what he describes as “reckless conduct” and “gross disrespect for the Constitution” the Minority wants the Mr Ofori-Atta to be summoned to answer questions on the floor.

“This singular failure of the bond issuance in this administration has brought Ghana’s image and integrity into disrepute in the financial market. Ghana has become a laughing stock in the financial market.”

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