As He Runs From US$250 Million Dirty Lies
The New Patriotic Party’s (NPP) Vice-Presidential candidate Dr. Mahamudu Bawumia, has been caught shifting the goal poles, from his earlier malicious claim that the Mahama government, has diverted US$250 million state funds to prosecute the 2016 electioneering campaign.
According to Akufo-Addo’s running mate, the Finance Minister’s explanation that the US$250 million deposited into a private account at United Bank of Africa (UBA), belongs to the Ghana Infrastructure Investment Fund (GIIF) and not to meet campaign expenditure, betrays his knowledge of financial laws.
Seeking to find respite elsewhere, Dr. Bawumia, stated that the transfer was rather a clear violation of Section 53 of the Bank of Ghana Act 2002 (Act 612), which relates to the holding of state foreign exchange.
The ex-Deputy Governor of the Bank of Ghana, told a gathering of students at the Accra Polytechnic last week Thursday that, government had diverted about 250 million dollars of the total proceeds from the US$1 billion Eurobond it issued in 2015 to a private account.
But addressing the media on Monday, Finance Minister, Seth Tekper, assured that, “the US$250 million seed money to GIIF lodged by the Board with a Commercial Bank is safe and has already started bearing interest to the idle Fund.”
Seth Terkper, had explained that the monies which were transferred to a private account at UBA, was done to invest the monies in order to accrue interest, adding the monies were sitting idle in the Bank of Ghana accounts.
“The Government wishes to state unequivocally that, the statement is factually wrong, technically deficient and gives a wrong impression to both Ghanaian and international investors and development partners”, Mr. Terkper had said.
He explained that “the passage of the Ghana Infrastructure Investment Fund Act, 2014 (Act 877) established a Fund which is owned by the Republic of Ghana to mobilise, manage, coordinate and provide financial resources for investment in a diversified portfolio of infrastructure projects in Ghana for national development”.
According to the Minister of Finance, “Section 5 of the Act provides for the sources of money for the Fund, which includes a portion of the Annual Budget Funding Amount (ABFA) from of the oil revenue; and moneys borrowed and raised from local and international capital market or from its affiliates. Further, as noted, a portion of the Bond proceeds was given as seed money to GIIF”.
“Furthermore, the Fund is mandated by Section 3 of the law to invest in, purchase, maintain and realize any investment of any kind. Consequently, GIIF is set up as Sovereign Wealth Fund and it’s a Statutory Fund just like the District Assemblies Common Fund (DACF), Ghana Education Trust Fund (GETFund) and the National Health Insurance Fund (NHIF) and is by law operationally independent”.
He insisted that “the Funds of GIIF are, therefore, not to be comingled with central government funds”, adding the Board of the GIIF has been inaugurated with the Ag. CEO in place the Fund is in operation. The administrative processes for its full operation has begun and an Ag. CEO has been appointed”.
Following this, Mr. Terkper said “a key strategy of GIIF is to use its resources to leverage investor funds for accelerated infrastructure development. It is in line with this that the Government allocated an amount of US$ 250.0 million as a seed fund for the GIIF in 2014 and not in 2015 as stated by Dr. Bawumia”.
“Accordingly, the Board which has the powers under Section 3 of the Act to manage and invest contributions made to the fund and to reinvest into the fund to generate returns could put its resources in a commercial bank for the sole purpose of investment”.
“Section 3 of the Act also confirms the provision in Section 21(2) of the Financial Administration Act that makes provision for the investment of public money in securities. Consequently, the funds which go into GIIFs Account in any Commercial Bank, cannot be misapplied for election purposes.
Rather, any idle fund will earn interest to support infrastructure development of the country”.
He pointed out that “It must be noted that Public Funds do not only reside in the Bank of Ghana. There are public funds in Commercial Banks and
International Financial Institutions where necessary, acting as agents for the Bank of Ghana. This is all accounted for as part of Public Funds”.
The Finance Minister, accused Dr. Bawumia of mixing operations of the Eurobond funded in both 2014 and 2015.
He recalled that in 2014, Parliament, gave approval for Government to source for a Eurobond to finance infrastructure budget of Government in 2014.
Considering that the GIIF is now a special vehicle for the purpose of developing infrastructure budget of Government, the Eurobond financing of the 2014 infrastructure budget, was the most appropriate thing to do.
Mr. Terkper stated that “the 2015 Eurobond of US$1,000.0 million is for refinancing of domestic debt purposes only. This amount was on the back of a World Bank guarantee (US$400 million). The guarantee and the amount was solely for refinancing of domestic debt. Nowhere in the prospectus or the policy statements of Government has the issue of budget financing been linked to it”.
He also recalled how “as part of the IMF Extended Credit Facility Programme, The Bank of Ghana would no more finance Government budget deficit. This is what we call the zero financing of the budget by the Central Bank. Consequently, Government’s strategy to manage the financing of the budget is to explore alternative financing instruments. One of the strategies is the earning of interests on Government’s own idle funds in the Banks.
Following from this, a number of Request for Proposals (RFPs) and stakeholder engagements have been held to implement this strategy”.
The finance minister assured “all Ghanaians that the US$250 million seed money to GIIF lodged by the Board with a Commercial Bank is safe and has already started bearing interest to the idle Fund. 19. It must be noted that Ghana now sources for some of its financing from the international capital market. The market has stringent rules and international law backing these transactions”.
He asked the public to “note that misinformation of Ghanaians and the international community in this manner, creates uncertainty in the minds of investors and could damage the appetite for Ghana bonds and such misinformation should cease, adding “as we strive to develop this dear nation of ours, it would be important to either cross check facts or understand the civic responsibility of every Ghanaian to ensure that the best interest for the nation is maintained at all times”.
However, Dr. Bawumia in a counter response through a statement issued yesterday, claimed he was saddened by the response and wondered the Mahama government can go for a loan and yet maintain that it does not know what to do with the money, adding while the money sits idle, several contractors are owed by the government.
“Is the Minister aware that the country owes N-Gas some $100 million? What about other contractors who are owed money by the government? How can you owe so much, have so much to do and yet claim to have “idle” borrowed funds?” he said in a statement.
Dr. Bawumia ,wants a parliamentary inquiry into the transaction.