The Ministry of Finance has denied allegations that it is involved in reckless borrowing. According to the Ministry, its borrowings are guided by the fiscal target for the year, the appropriation bill and maturities falling due during the year.
“The allegation… that the Ministry is involved in reckless borrowing is totally untrue and without substance. Any borrowing by MoF is strictly determined by the deficit target for the year as approved by parliament, the appropriation bill and maturities falling due during the year”.
On the contrary, MoF indicated that the current government has demonstrated exceptional fiscal discipline. According to the ministry, this is evidenced by the fiscal deficit falling below 5% prior to COVID despite the financial sector bail out costs. This also includes the energy sector excess capacity charges which have to be paid.
Furthermore, the ministry denied claims that it has borrowed GHS 250 billion over the last 4 years. It also denied allegations that Databank earned GHS 875 million in fees over the last four years acting as a transaction advisor for the total amount.
“Firstly, Databank acted only as one of the Co-managers on the Eurobond transactions. Over the last four years (i.e 2017-2020) GoG has only issued US$8 billion in Eurobonds. Co-managers are paid up to 0.10% of the international joint lead managers fees (circa 0.35%). All the co-managers share the 0.10% and not 0.35% of the total bond issuance value as stated by the author”.
Borrowing in the last 4 years
According to the MoF, the nominal total debt stock increased from GHS 122.17 billion in 2016 to GHS 291.61 billion in 2020. It stressed that “refinancing of existing debt stock never increases the debt stock”.
Meanwhile, MoF cited currency depreciation, program loans contracted but not disbursed, concessional loans, commercial loans and other financings as reasons for the rise in the debt stock. It stressed that “Databank was not involved” in these activities.
“The claim that GHS875 million was paid in fees is therefore impossible to conceive and totally misleading. The author just multiplied a perceived GHS 250 billion by 0.35% to arrive at GHS 875 million”.
The Ministry was reacting to claims in an article circulating on social media. The article was titled ‘Firms of Ofori Atta, Adu Boahen appointed advisors to Finance Ministry’. The said article purported that Databank and Black Star Brokerage have been appointed as advisors to the MoF. However, the Ministry described the content of the article as incorrect.
“It is our understanding that the firms in question that the story refers to are Databank and Black Star Brokerage. The Ministry would like to state that the claim that these two firms have been appointed as advisors to the MoF is incorrect”.
Databank and Black Star Brokerage not advisors of MoF
Moreover, the Ministry clarified that Databank and Black Star Brokerage are two (2) out of nine (9) firms that BoG/MoF have selected as Bond Market Specialists and not Advisors to MoF. The other firms selected to be BMSs are Ecobank, Stanbic Bank, ABSA, Cal Bank, GCB Bank, Fidelity Bank, and IC Securities.
“As stated above, the selection of the firms was solely based on their historical performance on the Bond Market and no other consideration. The issue of conflict of interest does not arise in this case because the selection process is purely based on meritocracy”.
Furthermore, the Ministry stated that it chose the firms based on the value of each firm’s secondary fixed income market trading activity as captured on the stock exchange. It clarified that the data is publicly available and as such, no representatives of the Ministry of Finance or BoG can influence the outcome.
Additionally, the Ministry highlighted that fees paid to BMSs are performance based and are a percentage of funds raised by the individual firms. As such, it is not MoF or BoG that determines the fees.
Ken Ofori-Atta and Charles Adu Boahen no longer in touch with their firms
Furthermore, the MoF explained that both Ken Ofori-Atta and Charles Adu Boahen are no longer involved in the day-to-day operations of either Databank or Black Star. According to the Ministry, Mr Adu Boahen resigned from the Board and from management of Black Star back in January 2017. This was immediately after he was nominated by the President as one of the Deputy Ministers for Finance. Moreover, the MoF noted the he transferred his shares in the company to a family trust on assumption of public office.
Likewise, the MoF stated that Mr Ofori-Atta resigned as Executive Chair of Databank in August 2012. Almost two years down the lane, he also resigned from all the Databank Boards in February 2014.
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