News Story

NPP

May 09, 2016


Government Diverts $250million Eurobond Money To Private Bank
...Borrows it back with interest

Dr. Mahamudu Bawumia, NPP Vice-Presidential candidate, has in a shocking revelation disclosed that the NDC government has transferred $250million of the latest Eurobond proceeds, which were secured at an unbelievably high rate, to a private bank and turned around to borrow back that amount through treasury bills- thus paying interests again on the same money to the Private Bank.

Dr. Bawumia made this revelation during a lecture at the Accra Polytechnic on Thursday on the topic ,Youth Unemployment – Causes and Solutions.

While touching on the reckless borrowing and improper management of Ghana’s debt stock under the NDC administration, Dr. Bawumia stated,

 
“I want to provide one example of the recklessness and incompetence I am talking about. Ghana borrowed $1 billion through a Eurobond issue in 2015. Government allocated $250 million of this borrowed funds to the Ghana Infrastructure Investment Fund (GIIF). This Fund is not yet operational. These Funds were initially deposited at Bank of Ghana where they should be. Notwithstanding the fact that the GIIF is not operational and there are no projects for the GIIF to implement now, the Government unbelievably transferred the $250 million from the Bank of Ghana to GIIF’s account at private Bank. With no project to execute, These Funds have now been lent to government through the purchase of treasury bills! This is unbelievable.”

The former Deputy Governor of the Bank of Ghana was puzzled at how government could go and borrow funds on the international market at an unbelievably high rate and then give those funds to a third party so it can borrow it back at over 20% on the domestic market.

“How can Government go and borrow funds from the international capital market at 10.75%, give the funds to another party and then borrow those same funds at over 22%! If this is not causing financial loss to the state, I don’t know what it is. It is an example of incompetent economic management.”, he stated.

Dr. Mahamudu Bawumia, who has on countless occasions exposed the government over its handling of the economy and has been vindicated by other bodies on several occasions for his analysis on the economy, wondered if this latest fishy scheme was another way of siphoning money to lubricate the NDC’s campaign machinery ahead of the elections this year and called on the government to come clear on the issue immediately and provide answers to the Ghanaian people.

“Who authorized the movement of the $250 million from the Bank of Ghana to the Private Bank? Who is the interest accruing to? If GIIF is not operational, why was this transfer done? Does the government understand that the money supply would increase? Is this a way to finance the Government’s election campaign? We need answers quickly on this and the Minister of Finance should explain to Ghanaians.”, he added.

Dr.Bawumia explained that as a result of the reckless borrowing and improper management of Ghana's debt, huge resources which should have been invested in infrastructure and social services now have to be used for interest payments.