Government Suspends 3 Year Bond Issue

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Government has suspended the issuance of a three-year bond that was scheduled for this month.

The bond issue which was expected to raise about 400 million Cedis was to be used to support government’s budget.

This is the second time the government has suspended a bond issue this year. The first was in March when it suspended the issuance of a 5-year bond that was intended to raise about 300 million Cedis.

Analysts believe government may not be willing to pay the high interest rates on the bond. The last 3 year bond issued in July attracted a high rate of 25.4percent.

Other analysts believe funds from the recently issued Eurobond, and funds government is expecting from the IMF may provide enough support for the budget.

Following the preliminary engagement with the IMF, the central bank was cautioned of its continuous excessive lending to government.

The borrowing limit in the Bank of Ghana Act stipulates a limit of 10 percent of revenue for the fiscal year, but the auditor general’s report revealed central bank exceeded its borrowing limit by about 170% in 2012.

It is believed the central bank may exceed the statutory limit this year.

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