Debt Woes IMF decries high Eurobond interest rate, says it's unfortunate

Last week, the Finance Ministry announced at the end of the Eurobond road show that it has secured a $1 billion facility with a 15-year maturity period at a coupon rate of 10.75 percent, amidst concerns that the facility is costly.

  • Published:
24/7 Live - Subscribe to the Pulse Newsletter!

The International Monetary Fund (IMF) has described as unfortunate the 10.75 percent yields government accepted on the $1 billion Eurobond issued recently.       

Last week, the Finance Ministry announced at the end of the Eurobond road show that it has secured a $1 billion facility with a 15-year maturity period at a coupon rate of 10.75 percent, amidst concerns that the facility is costly.

In an emailed response, Andrew Kanyegirire, a Senior Communications Officer of the IMF said: "An important element of Ghana's iMF-supported programme is strong fiscal adjustment, underpinned by fundamental reforms, to restore macroeconomic stability".

According to him, restoring macroeconomic stability is a key thing that will ensure the country's debt remains sustainable.

Ensuring that the country's debt is sustainable is a critical component of Ghana's IMF- supported programme, which also includes a debt management strategy that has been designed to ensure risks associated rollover are minimised.

But the facility, which the Finance Minister Seth Terkper had insisted will be used to refinance maturing domestic debt as well as some infrastructural developments, came at a rather higher cost, the IMF said.

"Unfortunately, current market conditions have pushed borrowing costs higher," Mr. Kanyegirire told the B&FT.

According to the Finance Ministry, the country's total debt stock as at July stands at Ȼ83 billion - of which domestic debt makes up Ȼ36.5 billion.

As per government's plans as spelt out in the 2015 revised budget, total interest payment is estimated at GHȻ9.34 billion. Of this amount, Ȼ1.6 billion will be expended on external interest while GHȻ7.7 billion will be for domestic interest payments.

But with the Eurobond's impact on the country's public debt, the Senior Communications Officer hinted the Washington-based lender will review the country's debt management strategy in coming months.

"The debt management strategy is something that is continuously reviewed to address emerging risks and less favorable market environment is something that will need to be factored-in going forward," he added.

Eurobond journey

Despite announcing that it would borrow US$1.5 billion from the international market, a statement issued by the Finance Ministry last week showed government has reduced that amount, having accepted an offer for $1 billion.

The release issued by the Finance Ministry said the bond is a soft amortising bond, meaning that it will mature in years 2028, 2029 and 2030 with principal repayment in three installments of $333 million in years 2028 and 2029, and $334 million in 2030.

Explaining why government watered-down its initial target, Finance Minister Seth Terkper explained that the approval passed by parliament granted government the leeway to raise up to $1.5 billion, subject to market conditions.

Essentially, according to the Finance Minister the figure is not absolute - and is subject to market conditions.

Unlike the previous bonds, which had 10-year maturity periods, the latest has a 15-year maturity period - making Ghana the first country apart from South Africa in sub-Saharan Africa to issue a bond of such nature.

Source: Joy FM

Do you ever witness news or have a story that should be featured on Pulse Ghana?
Submit your stories, pictures and videos to us now via WhatsApp: +233507713497, Social Media @pulseghana: #PulseEyewitness & DM or Email:

Recommended Articles

Recommended Videos

Top Articles

1 Importing Frozen Chicken Government ‘bans’ importation of frozen chickenbullet
2 Banking In Ghana 705,000 depositors to lose GHC740m – BoG Governorbullet
3 Defamation Suit Ibrahim Mahama sues Owusu Bempah, UTV for GHc2m over...bullet
4 World Water Day Ghana to soon import waterbullet
5 Ponzi Scheme Thousands of Ghanaians lose millions to Savana...bullet
6 Unibank Takeover Kofi Amoabeng says takeover of uniBank is...bullet
7 Taxes In Ghana VAT on condoms and 63 other commodities removedbullet
8 Dumsor Shut down my machines and ‘dumsor’ will be back –...bullet
9 Public Service Gov’t to check working hours of public...bullet
10 Menzgold Ghana Don't deposit money with Menzgold – BoG...bullet

Top Videos

1 Forbes 2018 Africa's billionaires rich listbullet
2 Money Alert Meet Africa's richest womanbullet
3 Plane Crash Starbow suspends operations following plane crashbullet
4 Dr Joseph Siaw Agyepong Nobody can collapse my company – JOSPONGbullet
5 New Discovery Ghana discovers new mineral, lithium in commercial...bullet
6 Bozoma Saint John 10 quotes from Uber top official, Bozoma,...bullet
7 Entrepreneurship How To Get Ready To Get Started | StartUpSchoolbullet
8 Support Finance minister buys Kantanka carbullet
9 New Phone Nokia’s MWC 2018 Event in Under 10 Minutesbullet
10 Entrepreneurship How to be resourceful as an entrepreneurbullet