Ghana is developing a plan that may see the country sell more bonds and move in the next three to five years away from dependence on grants and concessional loans, Finance Minister-designate Seth Terkper said.
Ghana is classified as in the lower middle-income range, meaning less grant money is available to the West African nation, which has the region’s second-biggest economy, Terkper told lawmakers in Accra, the capital. The former deputy finance minister was promoted by President John Dramani Mahama on Jan. 11.
“As we consolidate our middle-income status and these facilities become less available to us we would be in a position to borrow effectively from the capital markets,” Terkper said. Ghana would direct what it gets as concessional loans, typically with little to no interest and long repayment periods, and direct “them towards health, education and other social infrastructure.”
Ghana’s $35 billion economy was designated as lower middle-income by the World Bank in 2009 after it changed the way it measures output. Growth is forecast at 7.8 percent this year, faster than the sub-Saharan African outlook of about 5.3 percent, according to the International Monetary Fund.
Ghana sold its first Eurobond in September 2007, raising $750 million. The yield on the debt due in October 2017 dropped 6.4 basis points to 4.344 percent as of 1:40 p.m. in Accra, according to data compiled by Bloomberg. A basis point is equal to 0.01 percentage point.
Last month, Terkper said Ghana is considering issuing a further $750 million of the debt to refinance those earlier notes. The cost and duration of borrowing will determine the sort of facility the country will opt for in the future, he said today.