The Minority Spokesperson on Finance, Cassiel Ato Forson has reacted to the announcement by President Akufo-Addo that government was considering going for a $50billion century bond and advised the President not to "leave a huge debt."
Below is a copy of Ato Forson's statement on the matter
The $50 Billion Century BOND
1) During President Nana Addo Dankwa Akufo-Addo’s visit to the People’s Republic of China, he made it known that the Ministry of Finance and Economists in Ghana are considering floating a $50 billion Century Bond to provide resources to finance infrastructure and industrial development projects in the country.
2) I find this idea of floating a $50 billion Century Bond by this Government rather puzzling. It was this same Government that rejected a 40-year Development Plan aimed at putting the country on the path of prosperity and
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3) The nominal GDP of Ghana is currently projected at about GH₵ 242 billion by end of December 2018. Using a projected GH₵/USD exchange of 5.1 by end December 2018, the projected Nominal GDP in USD by December 2018 is about $47 billion.
4) With a projected debt to GDP ratio of say 70% (≤70%), if the government is successful with the issuance of the Century Bond, the additional debt of $50 billion will automatically increase the
5) The projected tax revenue to GDP ratio of about 16.9% is just enough for debt servicing and payment of wages and salaries including Gratuity (compensation).
As a result, the Government is currently borrowing to settle statutory payment such as GETFUND, DACF, NHIL,
Government is also borrowing to pay recurrent expenditures, such as discretionary spending on goods and services, and capital expenditure.
6) An additional debt of this magnitude will completely crush the already fallible Ghanaian Economy.
The economy lacks the capacity to support additional debt service for a $50 billion debt instrument. Any attempt to issue such a bond will result in a default of Debt service for Ghana.
7) Ghana as
8) Why should the Government Borrow $50 billion to sit in an account whilst it pays coupons on the debt for 36 - 60 months before full utilization. In this regard, it is in the interest of the people of this country to be well informed about the financing terms of the Century Bond.
9) Ghana recently issued a
If all other things remain the same, it means that an amount of $350 billion will be used to service the debt over the period. Why do you commit a country for 100 years if you are not too sure of the debts servicing and future repayment?
10) Considering the fact that Ghana's total revenue is only enough to service current Debt and Wages and salaries.
An additional Debt servicing of $3.5 billion will mean that Ghana will be borrowing from the domestic market an additional cedi equivalent of $3.5 billion from the domestic market to service the Debt.
11) This singular act will have dire consequences on the Ghanaian economy such as weakening balance of payment, deteriorating exchange rate, a rise in interest rate, and the Crowding out of the private sector.
12) Mr. President, be reminded that Ghanaians gave you a four (4) year mandate, out which you have served almost two (2) years. Please, do not hang Ghanaians to an everlasting bond of 100 years.
13) Mr. President, a good father leaves a good inheritance. Let posterity vindicate you and not victimize you. Please don’t leave us with this huge debt.
15) God bless Ghana
CASSIEL ATO FORSON, MP
Ajumako/ Enyan/ Essiam Constituency
Ranking Member of the Finance Committee