The International Monetary Fund (IMF) has described Ghana’s fourth Eurobond issued last year at a coupon rate of 10.75 percent as strategic and consistent with the government’s debt strategy management.
The one billion dollar Eurobond received criticisms from some financial experts and economists due to the cost of the bond, after government initially targeted a yield of 8.5 percent but was forced to take 10.75 percent.
Speaking at a press conference at the Spring Meetings in Washington, the IMF Director of African Department, Madam Antoinette Sayeh stressed that even though the timing of the bond may not have been the best, the government had no option since going to the domestic market was far more expensive.
“The choice for Ghana in terms of available financing unfortunately has been limited, and was limited at that time. The access to the sovereign bond market was always part of the financing plan”, she explained.
According to her, the move was endorsed by the Fund and was consistent with the debt management strategy that had been designed under the programme. “At the time, of course, domestic debt was considerably more expensive for Ghana
So we are confident that with the pursuit of the fiscal adjustment effort in the course of the year, Ghana will indeed be successful in containing its debt”, she said. Later this week, an IMF mission is expected in Ghana for a third review of the programme to assess government’s performance on key economic indicators.
Ghana’s growing debt which hit 25.6 billion as at December 2015 has been a major concern for some economic analysts and financial experts. However, Madam Sayeh maintained that the Fund is encouraged by government’s effort to stick with the targets under the programme , hence, the fiscal side is on track.
“One of the objectives of the program in Ghana is to help the government contain and reduce debt through performance in increasing the primary fiscal balance, and in doing that limit the need for financing through debt be it domestic or external and Ghana is making progress in that regard”, she said.
Antoinette Sayeh disclosed that the Fund is quite satisfied and encouraged with the implementation of the programme in Ghana.