The Bank of Ghana has released an amount of GH¢5.5 billion as first tranche of the GH¢10 billion of the COVID-19 Relief Bond, Finance Minister Ken Ofori-Atta announced in Parliament in Accra on Thursday.
In a memo to the House, the Minister said, the programme, launched earlier by the Government of Ghana is to trigger the emergency financing provision as result of challenges brought on by COVID-19 pandemic.
“Given the exceptional circumstances and the challenges, the Minister of Finance, the Governor of the Bank of Ghana and the Controller and Accountant General as required under Section 30 of the Bank of Ghana (Act 612) as amended have agreed to trigger the emergency financing provision under the law, which permits increasing the limit on the purchase of Government securities by Bank of Ghana in the event of any emergency, to help finance the residual expenditures,” the Minister said.
The GH¢ 5.5 billion first installment of the bond was released on May 15, 2020.
With high hopes of Ghana’s economy to rebound after the pandemic, Mr Ofori-Atta characteristically, and in a prayerful tone made biblical allusions with hope in God that Ghana would regain its economic strength.
The Minister said some of the financing measures identified by the Government include IMF Rapid Credit Facility of US$1 billion, World Bank Development Policy Operation (DPO) of US$350 million, Stabilization Fund US$ 219 million but that still results in a residual financing gap of about GH¢17.9 billion to be sourced from both domestic and external markets.
He said as a result of the pandemic with its attendant domestic market challenges there has been a reduction in liquidity on the market, with sell-off by non-resident investors.
“Therefore financing the residual gaps would not only significantly increase interest rates but would be counterproductive by denying the private sector access to cheaper sources of financing,” the Minister said.
Additionally, global financing conditions have also worsened and investors have negative sentiments towards emerging markets, which is making the international capital market remaining largely closed to emerging markets issuances.
However, Minority Leader and MP for Tamale South Haruna Iddrisu threw a jab at the Government saying, it was borrowing excessively and urged the Government to declare “Ghana Beyond Borrowing” rather than the policy of “Ghana Beyond Aid.”
The position of the Minority leader was challenged by the Majority Leader and MP for Suame, Osei Kyei-Mensah-Bonsu, who was of the opinion that the move by the Government was a novelty and in no way contravenes the Bank of Ghana Act.