ACCRA, (The Southern African Times) – Ghana is planning to issue green and social bonds of up to $2 billion by November. It’s also planning to borrow up to $5 billion on the international market. Finance Minister Ken Ofori-Atta says the cash will be used to refinance debt used for social and environmental projects and pay for educational or health programs.
“The expectation is that the bonds will be issued in the fall and the maximum can be $2 billion,” after Ghana already sold $3.03 billion in March out of the $5 billion for which it has budget approval, Ofori-Atta said in an interview with Bloomberg. “Out of the total, $3.5 billion will be used to refinance debt already raised. “Our actual new debt will be $1.5 billion,” he said.
This operation will make Ghana the first African country to sell debt to finance development programs. The idea of selling social bonds to finance development programs is one that’s grown in popularity since the pandemic. However, so far, only a few countries have done so.
Social bonds are used to raise funds for projects with positive social outcomes. Ghana hopes to use the proceeds from the November sale to forge ahead with a free secondary-school initiative started in 2017.
Sustainable bonds “are not cheap, there is no discount,” Ofori-Atta said. “We will seek to negotiate for the best terms though.”
Africa’s top gold producer, which is targeting a budget gap of 9.5% of gross domestic product this year, from an 11.7% shortfall in 2020, expects its output to expand 5% from 0.4% last year. It’s also working to improve tax revenue collection, which has historically been low compared to regional peers. This comes after President Nana Akufo-Addo said the tax base was set to grow more than fivefold to 15.5 million after the government’s April 1 implementation of a system where all national identification numbers serve as tax numbers.