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Sunday, December 5, 2021

Ministry of Finance publishes sustainable financing framework

The Ministry of Finance building in AccraThe Ministry of Finance building in Accra

The Ministry of Finance has published the Sustainable Financing Framework (the “Framework”) including the Second Party Opinion (SPO) to be used in connection with any future ESG linked or related capital markets issuance.

A statement issued in Accra said the publication of the Framework did not imply any new issuance under the International Capital Market Programme.

It said the aim of publishing the Framework was simply to allow investors and stakeholders to review its contents and be guided by it.

The Framework provides the Government, through the Ministry the criteria to screen programmes and projects with sustainable, green and/or social credentials that may require financing from the National Budget.

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The statement said under the Framework, it was recommended that any ESG related issuances should fall under two broad categories of Sustainable Financing Instruments.

These categories are those that will finance or refinance eligible green and social projects and expenditures (Green, Social and Sustainability bonds) and those that are linked to the performance versus the targets on certain defined Key Performance Indicators (Sustainability Linked Bonds).

It said given the current market conditions, strong reserves position, the recent US$ 1.007 billion SDR allocation and the relatively stable currency, the Government of Ghana does not intend to access the international capital markets again this year.

Ghana initiated its 2021 International Capital Market Programme for the issuance of sovereign bonds in the last quarter of 2020.

Subsequently, Parliament on November 10, 2020, granted the government approval to issue bonds amounting to US$3billion, of which proceeds of up to US$1.5 billion was to be applied to support the 2021 budget and growth expenditures.

The balance was to be used for reprofiling domestic debt and liability management purposes.

It said Parliament also approved a further issuance of up to US$ 2.0 billion, for liability management purposes and reprofiling of domestic debt, should market conditions prove favourable.

In March 2021, Ghana successfully issued bonds worth US$3.025 billion comprising the first 4-tranche Eurobond which included an innovative zero-coupon bond, under the 2021 ICM Programme.

The 4-tranche transaction was executed after a three-day virtual roadshow with a series of fixed income meetings with investors mainly domiciled in North America and Europe.

Based on feedback received from various investor engagements, including the roadshow meetings in March, Ghana accelerated its plans to develop and establish a Sustainable Financing Framework (the “Framework”).

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