$2.25bn bond didn’t need parliamentary approval - Akoto Osei

The US$2.25 billion domestic bond issued recently by the government of Ghana did not need to go to parliament for approval, Minister of Monitoring and Evaluation, Dr Anthony Akoto Osei has said in response to a demand by the Minority in Parliament that the bond issue should have gone to the chamber.

Also, the Minority in Parliament said Mr Trevor G. Trefgarne, a director at Franklyn Templeton, the institution that bought 95% of the bond, is also a Director at Enterprise Group Limited, a company of which Ghana’s Finance Minister Ken Ofori-Atta is co-founder, thus, raising issues of transparency, conflict of interest and suspicion.

At a press conference on Tuesday, the Minority, led by former Deputy Finance Minister Cassiel Ato Forson, said the involvement of the US-based firm changed the dynamics of the bond from being a domestic one to an international one that needed parliamentary scrutiny and approval.

“We also wish to point out that this Bond issue is clearly an international economic/business transaction within the meaning of article 181 (5) of the Constitution.”

“Therefore, we expected that the bond issuance would have been brought to parliament for approval. This is because although the transaction appears as to be a domestic sale of bonds, it is in truth a ‘private placement’ and an international economic transaction given the fact that Franklyn Templeton is a United States registered company and, therefore, qualifies as a foreign entity under article 181 (5) of the constitution. We, therefore, call on the Finance Minister to provide parliament with the full complement of documentation on this transaction for scrutiny and ratification,” the Minority demanded.

Addressing the concerns of the Minority, Dr Akoto Osei told Moro Awudu on Class91.3FM’s Executive Breakfast Show on Wednesday, 19 April that: “I don’t know exactly what is troubling the Minority but let me start with the issue about Article 181 (5). This was not an international transaction; this was done domestically, the participants, some of them are international but it’s a domestic bond which government does on a daily basis.”

“When government goes out to raise money on the domestic market, it doesn’t come to parliament, otherwise government business will stop,” Dr Akoto Osei added, saying: “The budget is such that government tells us its financing requirements and every government is allowed on daily basis to go out and transact their transaction.”

According to him, the processes used by the Akufo-Addo government is issuing the bond are the same processes that have repetitively been used by past governments of the NDC, thus, he found the complaints of the Minority befuddling.

“The same NDC people raised a 10-year bond on the domestic market last year through the same processes, so, I don’t see how they talk about transparency. [It didn’t come to parliament]. They do it on a daily basis, it doesn’t come to parliament.

“Look, what we’ve all agreed, both NDC and NPP, is that the composition of our debt is too focused towards the short term, so, it makes sense to lengthen the maturity for lower interest rates, coupon rates, so that we can save on the interest; that is what they did, that is what we are doing, they got a 10-year bond, we got a 15-year-bond with a lower coupon rate, nothing different, there is a way bonds are raised on the stock market so it’s no big deal,” Dr Akoto Osei explained.

On the Minority’s concerns about a potential conflict of interest, Dr Akoto Osei said: “I don’t have the facts, if they have a legitimate concern, there are ways to do that: 1. they can come to parliament and ask the minister of finance the question publicly. … But you see, they ought to be careful, these same people raised a 10-year bond and have they told us how they went about it and who is behind what and who did what? I mean, let us do politics but let us do it in a way that will not cast aspersions on people’s credibility without any facts.”

He said if the NPP, while in opposition, were to have “challenged every transaction that they [NDC] did, we would be going back and forth.”