Ghana plans to issue green and social bonds of up to $ 2 billion by November. It also plans to borrow up to $ 5 billion on the international market. Finance Minister Ken Ofori-Atta said the money would be used to refinance debt used for social and environmental projects and to pay for education or health programs.
“The bonds are expected to be issued in the fall and the maximum may be $ 2 billion,” after Ghana already sold $ 3.03 billion in March out of the $ 5 billion for which he approved the budget, Ofori-Atta said in an interview with Bloomberg. “Of the total, $ 3.5 billion will be used to refinance the debt already raised. “Our new real debt will be $ 1.5 billion,” he said.
This operation will make Ghana the first African country to sell debt to finance development programs. The idea of selling social bonds to fund development programs has grown in popularity since the pandemic. However, so far only a few countries have done so.
Social bonds are used to raise funds for projects with positive social outcomes. Ghana hopes to use the proceeds from the November sale to move forward with a free secondary education initiative launched in 2017.
Durable bonds “are not cheap, there is no haircut,” Ofori-Atta said. “However, we will seek to negotiate the best conditions.”
Africa’s largest gold producer, which targets a budget gap of 9.5% of gross domestic product this year from a deficit of 11.7% in 2020, expects its production to increase by 5% against 0.4% last year. It also strives to improve tax revenue collection, which has historically been weak compared to its regional peers. It comes after President Nana Akufo-Addo said the tax base will more than quintuple to 15.5 million after the government implemented on April 1 a system where all national ID numbers serve as tax numbers.
Story compiled with the help of Bloomberg