The Finance Minister, Seth Terkper has rejected claims that government is competing with banks in the country for dollar currency by issuing dollar bonds locally.
The Managing Director of CAL Bank, Mr. Frank Adu Jnr, and the Managing Director of Stanbic Bank, Mr. Alhassan Andani expressed some level of dissatisfaction in the new move by government to issue dollar bonds after a maiden one proved successful with government raising 94.6 million dollars.
“I disagree with the Seth Terkper on this action. I think it is a wrong move. This is government competing directly with banks for dollars,” Mr. Adu told the B&FT.
Mr. Andani also cautioned that the move could be counterproductive if not controlled, since Ghanaians could be lured to convert their local currency into dollars to participate in the security.
But speaking to Citi Business News, Mr. Terkper maintained that there is no justification for commercial banks to panic over the move since the policy will rather benefits the banks.
“Government policy has benefited the banks, is the reverse of what the banks are talking about now, what they are saying here is that we are mopping dollars from their deposits and it will lead to competition by government. But you saw the reverse where government action also benefited the banks when about 500 milion dollars was used to pay domestic debt,” he said.
He was of the view that government at the time incurred higher cost when the interest rate of the bond was at 10.75 percent, even though it is now around 10 percent.
“At the time, government was criticized for borrowing at 10.75 even though those bonds are now trading at below 10 percent. We did not see the banks point to the benefit,” he said.
“The point am trying to demonstrate is that we have been mindful of the impact of government borrowing in terms of liquidity, in terms of crowding , in terms of interest rates on the economy. If you look at that amount that we are raising which is 90 million dollars compared to the 250 million dollars in the 2014 bonds to do refinancing , we have used in excess of 500 million dollars to do domestic refinancing you will see that the balance is more in favour of banks and the domestic market in taken pressure off the domestic market than putting pressure on the domestic market,” he added.
Reacting to the assertion that the bond could lure Ghanaians to convert their local currency into dollars, Mr. Terkper explained that the transaction was done through the Book Builders Approach with the participation of the banks.
He pointed out that the transaction was also limited to participants with accounts, and not done over the counter.
Mr. Terkper insisted that the banks cannot criticize the bond since it is also being traded on the secondary market where the banks are participants.
–
By: Lawrence Segbefia/citibusinessnews.com/Ghana
We’ll no longer tolerate your empty, unwarranted attacks – TUC blasts Prof Adei
Bawumia donates GHc200,000 to support Madina fire victims
IMF to disburse US$360million third tranche to Ghana without creditors MoU
Truck owner share insights into train collision incident
Paramount chief of Bassare Traditional Area passes on
Two teachers in court over alleged illegal possession of BECE papers
Sunyani: Victim allegedly shot by traditional warriors appeals for justice
Mahama vows to scrap teacher licensure exams, review Free SHS policy
Government will replace burnt Madina shops with a new three-story, 120-store fac...
