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| Sovereign Bond will close infrastructure devt gap |
10/11/2007 |
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Accra, Oct. 11, GNA - Mr Kwadwo Baah-Wiredu, Minister of Finance and Economic Planning, has said Government intended to apply the 750 million dollar Sovereign Bond secured from the international market to close the infrastructure gap in the nation''s development. He told journalists at a press briefing to explain the facility that the Government was to invest in growth catalytic areas to remove bottlenecks constraining growth.
The Bank of Ghana is the fund manager. It would operate it under the Capital Markets Committee chaired by Dr Mohamadu Bawumia, Deputy Governor of the Bank of Ghana.
He said a number of portfolio projects had been identified within the area of energy, road transport and railways. "Projects selected for market finance should be high yielding with a high economic rate of return to allow the project pay for itself and should be growth catalytic by removing critical bottlenecks in the economy," he said.
He noted that Ghana was the first Sub-Saharan African sovereign country, except South Africa that had successfully accessed the international bond market. It has 10-year tenure with a coupon rate of 8.5 per cent.
Mr Baah-Wiredu said the access to the international Capital Market capped a historic process of transformation in economic management based on disciplined policies, good governance, fiscal monetary policy transparency and structural reforms.
"It came as the next logical step after the completion of the HIPC Programme and the Poverty Reduction Growth Facility Programme with the IMF which classified Ghana as a matured stabilizer."
He said the three areas of focus are mainly in the energy-transport sector including rail, where the economic rate of return for projects were identified as very high and could have significant impact on economic growth and employment.
Part of the proceeds would be leveraged into public private partnerships to encourage private sector participation in the provision of key infrastructural services in Ghana, and to play its role as partners for development.
The Finance Minister said Ghana would need to manage the fiscal deficit, keep inflation low and maintain exchange rate stability even while pursuing accelerated growth, stressing that, "we need to achieve rapid growth with stability".
Mr Baah-Wiredu said among the numerous benefits of the maiden sovereign bond issue was that it would serve as a benchmark for the corporate sector to develop their balance sheets to take advantage of capital market resources, provide strong policy signals for increased Foreign Direct Investment flows into the country.
Mr Jospeh Kofi Adda, Minister of Energy, welcomed the money saying it would enhance generation capacity, expansion and the rehabilitation of equipment, some of which, he alluded were as old as 60 years. "What we will be able to do with the 200 million dollars that we hope to get will be to change these equipment and bring efficiency that would curb the 400 million dollars a year losses to the State."
He said it was imperative for the Government to take another look at ensuring that the losses were recovered through an appropriate tariff regime.
The fund for the road sector would turn the Accra-Kumasi road among others into a dual carriage way 11 Oct 07
Source:
GNA
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