Wednesday, 25 March 2015

Ghana seeks bridge financing of up to $1 bln

Ghana seeks bridge financing of up to $1 blnACCRA, March 20 - Ghana will seek bridge finance of between $300 million and $1 billion in the first half of this year to redeem maturing domestic debt, according to a memo to parliament signed by Finance Minister Seth Terkper.

The debt finance plan emerged as Moody's downgraded Ghana's sovereign rating and put the West African country on a negative outlook to reflect its increasing debt burden, large fiscal imbalances and a sharp weakening of the cedi currency.

The memo said the government would also issue a Eurobond of up to $1.5 billion in the second half of the year to retire the bridge finance, refinance domestic and external debt and fund 2015 capital expenditure.

"In view of the need to reduce debt service costs as part of fiscal consolidation and to manage maturities of debt obligations and bullet points, I ... urge Members of Parliament to consider and approve the financing plan," the memo said.

The Moody's downgrade of one notch to B3 from B2 marks the latest economic reverse for Ghana, which for years saw some of the strongest growth rates on the continent due to exports of gold, cocoa and oil.

Ghana struck a deal with the International Monetary Fund (IMF) in February for a three-year $940 million assistance programme.

The deal should relieve fiscal pressure but there are concerns about the government's ability to meet the IMF's targets ahead of elections in 2016, said Fitch on Friday as it affirmed Ghana's rating at 'B' with a negative outlook.
Terkper told reporters that Ghana's medium-term prospects are good and the government has taken the needed steps to achieve fiscal consolidation. Read More...

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