Government has denied that it is solely using funds raised from treasury bills to finance coupon payments of new bonds.

According to government, it has been using other sources of funding to pay the new bonds. 

Minister of State at the Finance Ministry, Dr. Mohammed Amin Adam disclosed this on PM Express Business Edition on August 25, 2023 with host George Wiafe.

https://www.youtube.com/watch?v=M2ydoHVJX-w

“We are collecting tax revenue, grants and pursuing expenditure controls. All these are avenues that government is depending on to finance its expenditure”, he explained.

He stated that recent payment of bonds made on August 22, 2023 were largely from taxes and money raised from the treasury bills market.

Market Players Concerns

Some market observers have raised concerns about the amount of funds raised by government on the treasury bills market in the second and third quarter of this year.

Government has been constrained in raising funds after Ghana was restricted from going to the international capital market to raise money due to bad ratings.

Government is planning to raise about ¢39 billion in treasury bills in the third quarter of this year.

This has not gone down well with some market players, fueling arguments that the money will be used to finance new bonds that will mature from August 2023.

Government has however insisted that there are multiple funding streams to support its expenditure.

Is government going to restructure treasury bills?

Reacting to questions about government’s intention to restructure treasury bills, due to growing interest cost and the amount borrowed, Dr. Adam said there are no such plans.

“This cannot be true because treasury bills have become a very import source of revenue for government’ expenditure in these times”.

“We are not considering any plan to add the treasury bills to the Domestic Debt Exchange Programme”, he emphasized.

“I want to assure investors and market players that government will never undertake this action”, he added.

Market reaction to recent coupon payments

Government on Tuesday August 22, 2023 announced that it has released some ¢2.4 billion to settle coupons on the new Domestic Debt Exchange Bonds.

Government has maintained that the action should help restore market confidence and assure market participants that government will not default on future payments.

The Finance Ministry added that it remains committed to honouring all future payment obligations, in accordance with the terms of the new arrangements.

Touching on Ghana’s credit ratings, Dr. Adam said he is expecting the rating agencies to react positively to the actions taken by government.

“This is because, some of the agencies recently reviewed Ghana’s ratings after government announced that it is embarking on the Debt Exchange Programme. Some of these agencies attributed the action decision by Government to defer the payment on these bonds.

Dr. Adam is hopeful the rating agencies will soon respond to the new developments put in place by government.