Government’s desire to borrow more funds continues to grow as the Ministry of Finance targets Ghanaians in the diaspora to raise bonds from them.
In recent times, government’s decision to borrow from the international market has been heavily criticized as piling up the debt stock of the country, affecting interest rates.
But speaking to Citi Business News, the Finance Minister, Seth Terkper stated that government is targeting Ghanaians in the diaspora to raise money from them since it may be cheaper. According to him, such bonds have been successful when a particular group of people from a country living abroad are targeted to invest in Diaspora Bonds.
“The Diaspora Bond is your residents who are in the diaspora or who are outside and have resources. Somebody living in the US and earning dollars. So you are borrowing in dollars when you go do stocks, when you go borrow from banks. You can look at this group and target them and give them an instrument, just like a bond, just as we have the sovereign bond or the corporate bond,” he said. He was of the opinion that Ghana will succeed in a diaspora bond since interest payment on savings in US and Europe is minimal and insignificant.
“We know for example that at the moment if you have an account in the US or Europe the interest rates there is close to zero, we are offering about 5 percent or even 8 percent,” he disclosed.
He stated that all the financial team requires is to embark on a sensitisation workshop to identify Ghanaians and West Africans living abroad who may be interested in the bond.
“You do the same education you do for the other bonds and you tell them we can offer you a better interest. If you have a credible source of repayment or you back it with your oil revenue as a source of repayment towards a particular project it could be successful,” he stressed.
He maintained that Diaspora bonds are mostly hinged on assurance of repayment which the government of Ghana has done well due to the establishment of the Sinking Fund.
“That Ghanaian who is outside or West African outside, if you open it up a bit and make them trust that you have credible source for repayment just as the Sinking Fund they would give you that money,” he said.