The World Bank has explained that it could not issue a full guarantee for the recent Eurobond because it is against the institution’s practice.
The Bank earlier this year extended a 400 million dollar guarantee for Ghana’s fourth Eurobond.
However despite this support, the country’s Eurobond was still classified as risky by various ratings agencies, a development that resulted in Ghana paying a coupon rate of 10.75 percent.
Some had argued that Ghana could have secured a favourable rate if it had gotten a 100 percent guarantee.
But the Country Director for the Bank Henry Kerali says there is little it could have done in the current situation.
“If we look at the current state of the capital market, it is actually quite a few basis points lower than would otherwise have happened. As a guarantee we don’t tend to cover hundred percent of the guarantee – that is our policy because the risk is borne by the capital market.
“Hundred percent guarantee means that the bank might as well lend to Ghana itself. We have a cap on how much we can lend to Ghana and as a result the 400 million that we made available is part of that discussion of how much is available from the World Bank for Ghana “, he continued.
The World Bank country boss says it stands by its approach on dealing with the government on how it is managing the economy.
The World Bank has in the past and even recently been criticized for contributing partly to the current challenges facing the economy.
But Henry Kerali replied, “We are always very frank and honest when we deal with the government, we do not necessarily go to the public or the press with our conversation with government.
“I can assure you that the World Bank is very open when it discusses with the government, we tend to keep things private…
“Naming and shaming is certainly not necessary because we are dealing with sometimes very sensitive issues that have impact beyond what the government can control”, he stressed.
