Gov’t rejects damning verdict on use of sovereign bond funds

General News of Saturday, 7 February 2015

Source: Citifmonline.com

Mona Helen Quartey Min Finance

An Overseas Development Institute (ODI) report assessing how Ghana and other sub-Sahara African countries, use their sovereign bonds has drawn a reaction from the Finance Ministry, rejecting some of the claims in the report.

According to the ODI report, the “irresponsible use of funds by some countries was contributing to the problem, with Ghana frittering away money on public sector wage increases.”

But in a statement signed by a Deputy Finance Minister Mona Quartey on Friday, the Ministry described some of the claims in the report on Ghana as “inaccurate.”

It also insisted that government does not use the funds raised from bonds for the day-to-day running of the country.

“Government of Ghana has a strict policy of not using borrowed funds for recurrent expenditure. Therefore the claim that international sovereign borrowings were used to cover public sector wages is inaccurate,” the statement said.

The Ministry admitted that government is managing the difficult wage bill but the country is “capable of using its domestic revenues to meet its wage payments.”

Government backed its point by saying that the “Tax Revenue amounted to about GH?19.0 billion in 2014, whilst the wage bill was about GH?9.4 billion in the same year, even with the recent difficulty in implementing the wage policy called Single Spine Pay Policy.”

In 2014, government issued a number of bonds on the international market including the $1billion Eurobond. Government in December 2014, also rejected some claims that it had misapplied the proceeds from the bond issue.

It insisted that it had been credited to the designated government accounts with the Bank of Ghana (BoG) and are still part of government deposits at the central bank.

The Finance Ministry, further defending itself against the ODI report indicated that public sector wages have fallen from 57.6% of government revenues in 2013 to 49.3% in 2014 and all other things being equal, expected to decrease further to 40.5% in 2015.

According to the Ministry, the 73.7% that is widely quoted is actually the ratio of compensation payments to tax revenues in 2013 including arrears. This ratio narrowed to 61.4% in 2014 and is expected to decrease further to 50% in 2015.

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