Ghana to Use Longer-Term Bonds for Budget After IMF Deal

Ghana said it will use longer-dated debt to finance its budget as an agreement with the International Monetary Fund increases investor confidence.

The West African nation sold 225.2 million cedis ($65 million) of two-year notes on Feb. 27, the most since July 2013, according to data compiled by Bloomberg. The results are part of the government’s strategy to issue debt with longer maturities, Deputy Minister of Finance Cassiel Ato Forson said by phone Tuesday.

“We saw the appetite coming from the market so we moved toward that,” Forson said. “If you’re using some of these bonds to finance your budget, the 91-day is quite short. You want to extend it to longer tenure.”

Ghana reached an agreement with the IMF last week for almost $1 billion in loans to boost foreign-exchange reserves. The currency plunged last year driving inflation higher as falling prices for gold and cocoa sapped government revenue. The deal with the IMF may attract as much as $1 billion in budget support from other international donors, the Washington-based fund said.

Ghana sold its two-year securities at an average yield of 23 percent on Friday. That compares with 25.8 percent it paid to sell 453 million cedis of 91-day bills the same day. Bids matched the amount sold in the two-year offering, while the bid-cover ratio was 1.8 for the three-month bills.

“I see interest rates on the shorter-dated instruments falling below the longer-dated ones” by the end of the year, John Ofosu Awuku, a portfolio manager at NDK Asset Management Ltd., said by phone. “The IMF will not just give you money. It will be around every step of the way to make sure the right policies are made.”

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