The Finance Minister, Seth Terkper, says absence of an interest rate cap on the latest attempt to borrow one billion dollars from the international market is because it would be impossible to do so.
“Nobody is able to tell when you are going to float a bond on the international capital market what rate you’ll get, not even the analysts in the US Treasury, not even the US Fed will be able to tell you what you are going to get”, Seth Terkper said on Joy FM’s Super Morning Show Wednesday.
He was reacting to criticism by the Minority in the Parliament that the Eurobond is bad because of possible unprecedented rate of borrowing.
The Minority says in the past, the Minister has provided a range within which he intends to borrow.
Seth Terkper has however cautioned, “you don’t just look at interest rate in making your decision when you are in the financial market.”
The Minority is blocking the Minister from going to the international market.
If the motion passes, it would be the second time the Minister is borrowing from the international capital market this year.
In October this year, it borrowed one billion dollars at an interest rate of 10.75% over 15 years. On Tuesday the MPs voted against a move to a secure sovereign guarantee for the latest one billion dollar Eurobonds issue.
The Minority says government is borrowing too much.
Seth Terkper says the entire one billion dollar Eurobond waiting for Parliamentary approval would be used for refinancing Ghana’s short-term debts.
“We are moving away from the practice where we pay only interests so that we stop rolling over our bond,” the Minister said.
Source: myjoyonline