Economist and Vice Presidential Candidate of the opposition New Patriotic Party (NPP), Dr. Mahamudu Bawumia says the Minister of Finance, Seth Terkper’s 2016 budget presentation on the Eurobond loan facility exposes his lack of understanding on the subject.
The minister while presenting the budget to Parliament on Friday touched on a number of issues including health, education, public sector wage, the IMF programme, and the Eurobond.
Speaking on the bond, the minister said: “Ghana has once again issued a landmark bond [Eurobond] and has become the first sub-Saharan African country outside South Africa to issue a 15-year bond.”
An elated Terkper further told the House “government secured its fourth Eurobond at a coupon rate of 10.75 percent with a maturity of fifteen years” adding that, the bond is “a soft amortizing bond to be repaid in three installments of US$333 million in years 2028 and 2029, and US$334 million in 2030.”
Rebutting the minister’s presentation on the bond in a Citi News interview, however, Dr Bawumia was shocked the former was not saddened government had secured the bond at 10.75 percent.
“The Eurobond issue of 10.75 percent, the billion dollars issue of 15 years.
You are going to be paying 10.75 percent. When you should be crying, you are rather saying you have done very well and it shows a fundamental lack of understanding. It is a very bad deal for the country. 8 percent above US treasuries, compared to 3.8 percent above US treasuries when we [NPP] did the 2007 budget so that area is really a sad area of mismanagement. Then you look at the debt stock that this is accumulating.”
“This debt stock will reach $99 billion by the end of this year. The interest of this debt alone is going to be 6 times Ghana’s oil revenue,” he argued.
Government successfully issued its fourth Eurobond in October but it had to cut back on its initial figure to get a better rate for the bond.
The Minister earlier revealed that the bond had been oversubscribed by about one hundred percent.
Dr. Bawumia further punctured projections in the 2016 budget, saying it failed to address the basic challenges of the citizenry.
“How does this budget address unemployment, the youth unemployment and you look at the resources this government has had over the last seven years, phenomenal amount. Taxes, loans and oil alone; 200 billion Ghana cedis.”
“When the Kufuor administration was there, with such meagre resources, so much can be pointed to as well. Social interventions, free maternal health and so on. You can point to infrastructure but the IMF Managing Director put the nail on the head when he said that the borrowing done by the government has been used for consumption and not for investment,” he added.
Dr Bawumia revealed that the NPP will soon organise a press conference to offer their alternatives for the country in 2016.
“They can try to hoodwink us with pictures of development all over the place but the reality is that they should have been doing twice as much. They had ten times as much resources as the NPP government had. We are going to build a new economy, we cannot just criticise without providing alternatives so we will organise a press conference on Thursday to state our objective.”