Ghana\u2019s total external debt owed to commercial lenders grew by 19.7% to above US$1 billion in the 12 months to December 2010, according to data from the Bank of Ghana.<\/p>\n
The figure includes the US$750 million borrowed from the international capital market in 2007 in the famous Eurobond issue, that was considerably oversubscribed and which is due for repayment in 2017.<\/p>\n
Debts owed to multilateral creditors, including the World Bank and IMF, rose by 21.6% to US$2.99 billion, while bilateral debt grew by 24% to US$2.09 billion within the period.<\/p>\n
Overall, the total external debt stock soared by 22% to US$6.1 billion, representing 20% of nominal GDP and an addition of US$1.1 billion between end-2009 and end-2010.<\/p>\n
A recent string of three-year fixed-rate bonds issued by the Central Bank on behalf of the government saw strong foreign participation, which should add to the stock of commercial debt held externally.<\/p>\n
With Ghana now a middle-income economy and showing improvements after recent macroeconomic challenges, its access to cheap multi-donor and multilateral financing looks set to decline, Ishac Diwan, World Bank Country Director, said recently.<\/p>\n
\u201cIn all likelihood, multi-donor budget support (MDBS) financing will start declining in 2012,\u201d the Bank\u2019s economist told an annual review-meeting of the government and its development partners (DPs) in Accra recently.<\/p>\n
\u201cThis is partly the result of a return to normalcy, after a surge to deal with the financial crisis since 2008.<\/p>\n
But it is also a reflection of Ghana\u2019s new middle-income status as well as budget difficulties in DP countries,\u201d he explained.<\/p>\n
Many expect the government, therefore, to boost its tax collections to fill the gap, and to rely more on commercially-sourced credit to shore up the budget and undertake development- financing.<\/p>\n
For the third time this year, the Bank of Ghana is to issue a three-year fixed-rate bond to raise GH\u00a2300 million for the government.<\/p>\n
The bond\u2019s auction took place yesterday and was available to both resident and non-resident investors.<\/p>\n
In a previous auction in April to raise GH\u00a2320 million, the offer was oversubscribed by 163%, with the Central Bank receiving bids totalling GH\u00a2840.79 million from investors.<\/p>\n
A uniform allocation rate of 12.39%, which is the maximum coupon rate payable on all bids, was determined at the time.<\/p>\n
The cedi\u2019s reaction was rather subdued following the announcement of the recent bond sale, with only a marginal appreciation against the dollar, according to a currency analyst at Gold Coast Securities, Yaw Adu-Koranteng, who explained that strong demand for the dollar appeared to have offset the upward pressure on the local currency.<\/p>\n
The Central Bank has expressed some worry about volatile currency movements during the period of bond issues as non-resident investors initially move funds into the banking system to purchase the securities, and subsequently attempt to repatriate the leftover in the event of an over subscription.<\/p>\n
These movements bring intermittent shocks to the currency market, causing unstable swings in the cedi\u2019s exchange rate.<\/p>\n
The pound and euro, meanwhile, have been trading strongly, reflecting global trends that are largely the outcome of a macroeconomic policy divergence between the United States and the Euro-zone.<\/p>\n
Source: Bank of Ghana<\/p>\n<\/div>\n
Link:
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