In spite of all the grandiloquence of Finance Minister, Ken Ofori-Atta, his presentation of the 2022 Budget has failed to woo investors of the international capital market to buy Ghana’s junk bonds, experts note.
According to the MP for Bolgatanga Central, Isaac Adongo who has mocked Ghana’s Finance Minister whom Adongo says thought he could use dubious figures to deceive international lenders just like he has done to Ghanaians over the years.
The capital market’s reaction to the budget statement read by the Finance Minister is to increase Ghana’s risk premium to above junk and distressed category at over 11%.
“How can you fail to raise Ghc59 billion and scam them with Ghc89 billion in 2022? After fooling us over the years, they now think they can scam the smart and efficient capital market. When is the Kenkey funeral for the Bawumia economy?” Adongo wrote on his social media platform.
Above junk categorization means the country’s bond offers on the capital market are regarded as too risky to invest in.
Ghana’s bloated debt which is 81% of its GDP has, therefore, turned investors off.
A recent analysis by Goldman Sachs said Ghana’s sovereign bonds are being considered by investors who are asking for higher premiums as junk.
The leading securities and investment management firm said Ghana is the riskiest among the so-called junk-rated developing countries that investors are doing well to stay away from.
The average extra premium sought on dollar securities sold by Ghana’s government has widened by 162 basis points since the beginning of September to 853, edging toward the 1,000 level that is generally classed as distressed.
Since the Akufo-Addo Government took over in 2017, almost Ghc250billion has been borrowed to add to the Ghc120billion that the government met in office.
The West African nation’s sovereign debt has soared to 81.5% of gross domestic product this year, from 35.6% in 2012.
According to Goldman Sachs analysts including Sara Grut, many of the countries with the highest debt levels saw bond yields move into distressed territory amidst an onslaught from COVID-19.
According to Hon. Adongo, this reality is what the Finance Minister tried to use grandiloquence to mollify but that investors have refused to be deceived.
This is in spite of Ofori-Atta of the fact that the Finance Minister announced bold and ambitious targets of 20% tax to GDP and 44% revenue growth in 2022.
But as Hon. Adongo points out, the government failed to achieve its 13% tax to GDP target in 2021 something that makes analysts question Ghana’s ability to achieve the new ambitious targets.
The government also missed the GHC59 billion revenue target in 2021 which has now been revised upwards to GHC89 billion in 2022.
