Public debt up due to bonds issued
The central bank has attributed the rise in the public debt to the recent US$3 billion sovereign bond issued as well as the GHC1.4 billion bond for the banking sector.
The public debt ballooned to GHC198 billion or US$38.9 billion as at the end of March 2019 representing 57.5 percent of Gross Domestic Product, (GDP), from GHC147 billion which was 49.5 percent of GDP for the same period in 2018.
The governor of the central bank, Dr Ernest Addison explained that “If you look at the debt stock for the first quarter, you would see that there has been an increase in the debt stock of about five percent of GDP, representing the sovereign bond issue of US$3 billion. In addition to that, you would find that there was a bond issued in March for the banking sector to cover the net gap of about GH¢1.4 billion for the last two banks, that is, the Premium bank and Heritage bank”.
The 2019 debt Strategy envisages the issuance of medium-term domestic instruments to help address cost associated with the financial sector clean-up. With zero central bank financing of the budget still in force, the strategy further envisages a cash buffer beyond the net domestic financing to cater for liquidity and liability management.
According to the government, to ensure an effective implementation of this strategy, an annual borrowing and recovery plan will be published for 2019 in line with Section 60 (5) of the PFM Law.
Government intends to further develop the primary and secondary markets by reforming the primary dealership framework and facilitates securities trading on the domestic market through the GFIM.
The government issued its debt calendar for the second quarter of 2019 with plans to raise GH¢12.1 billion, from the money market through the issuance of Treasury Bills, Notes and bonds for the second quarter of 2019.
Of the amount, GH¢11.5 billion would be used to rollover maturities debts and the remaining GH¢566 million would be used for government’s financing requirements.
For the second quarter, the Bank of Ghana would issue a 91 Treasury worth GHC4.3 billion, 182 day bill worth GHC2.9 billion, 364-day bill worth GHC750 million, a 2 year bond worth GHC600 million, a 3 year bond worth GHC800million, a 5 year bond worth GHC1 billion, a 6 year bond worth GHC500 million, a 10 year bond worth GHC800 million and a 15 year bond worth GHC450 million.
The Calendar was developed based on the 2019 Net Domestic Financing (NDF) as stipulated in the 2019 Budget and Economic Policy of Government, domestic debt maturities and the MTDS for 2019-2022. The calendar shows the securities that are intended to be issued for the period April to June, 2019.
The Calendar also takes into consideration Government’s liability management programme, market developments (both domestic and international) and the Debt Management objective of lengthening the maturity profile of the public debt.