The Minister of Finance, Mr Ken Ofori Atta is seeking Parliamentary approval to issue sovereign bonds of US$3 billion with the option to increase it to US$5 billion should market conditions prove favourable.
The amount is to help the government finance its activities for the first three months of 2021.
Presenting the 2021 Expenditure in Advance of Appropriation to Parliament, he said “to support the 2021 budget and liability management, we plan to source funding from the international capital market.
“This will comprise the issuance of sovereign bonds of US$3 billion with the option to increase it to $5 billion should market conditions prove favourable,” he stated.
Out of the amount, he said US$1.5 billion would be used to support the 2021 budget and US$3.5 billion for liability management.
The presentation of an advance appropriation in the last quarter of the year, as is the case when it’s an election year, is done instead of a conventional budget presentation in November.
Request for GH¢27.4 billion
The Minister of Finance requested for the House to approve an amount of GH¢27.4 billion to carry on the services of government until the expiration of three months from the beginning of the 2021 Financial Year”.
The GH¢27.4 billion is expected to cover Government operations, such as “Compensation of Employees, ex gratia awards, Interest and Amortization payments, transfers to Statutory Funds, critical programmes and Goods and Services, and Capex allocations of MDAs,” Hon. Ken Ofori-Atta remarked.
Touching on the robustness of macro-economic fundamentals and the efficacy of the Government’s COVID-19 mitigation measures, the finance minister said that, recent indicators and surveys carried out by the Bank of Ghana indicate that both consumer and business confidence levels are “bouncing back strongly” even though business confidence remains below pre-lockdown levels.
“According to the Bank of Ghana’s surveys in August 2020, consumer confidence is bouncing back strongly and is currently above pre-COVID-19 lockdown levels. Business confidence has also increased, although below pre-lockdown levels. About 95 percent of businesses surveyed showed strong optimism, reflecting the improving macroeconomic conditions, stability in the exchange rate, lower input prices, moderation in lending rates, and positive industry prospects”.
“The projected GDP growth rate [of] 2020 reported in July has been revised from 0.9 percent to 1.9 percent to reflect these dynamics. As the Bank of Ghana stated ‘the green shoots of [a] rebound in economic activity’ are already with us,” the Finance Minister added.
Financial system
Hon. Ken Ofori-Atta gave some insights into the financial ecosystem, stating that it is stronger and will “facilitate credit and investment to the private sector”.
The Minister of finance further asserted that “we have established the Ghana Incentive-based Risk Sharing System for Agricultural Lending (GIRSAL) to facilitate lending to the Agricultural sector, the Ghana Amalgamated Trust (GAT) to support indigenous participation in the banking sector, the Ghana Commodity Exchange (GCX) to modernize Agricultural transactions and provide security for our farmers, the Ghana Deposit Scheme (GDS) to protect depositors’”.
“We have also established a National Development Bank which already has commitments of over 500 million USD as a wholesale bank to further support these financial institutions,” the Finance Minister pronounced.
