Head of the Finance Department at the University of Cape Coast, Dr John Gatsi, has disputed government’s argument that the 2.25 billion-dollar bond it issued, is a local bond, and called for an investigation into the matter.

He argued per Ghana’s Public Borrowing Guidelines and the fact that greater portion of the bond comes from private external source, “it [the $2.25 billion bond]is external borrowing” contrary to the explanation by the Ministry of Finance.

Government announced on April 3 that it has successfully issued 15 and 7-year bonds with the same coupon rate of 19.75%, raising a total amount of 1.13 billion dollars, and another 1.12 billion (cedi equivalent) in five and 10-year bonds via a tap arrangement.

The minority Members of Parliament subsequently raised red flag over the issuance of the bond citing lack of transparency, conflict of interest and lack of borrowing without parliamentary approval as the basis.

The Ministry of Finance on Thursday hit back at the minority in a statement issued to debunk the claims by the minority MPs, describing those as “baseless” and designed to …” designed to malign and negate the positive news and rave reviews this landmark transaction has garnered, both locally and internationally”.

It took the view that the bond as issued was indeed a local one which ought not be given a parliamentary approval.

But Dr Gatsi who is an economist argued the explanation by the Finance Ministry, is “too simplistic”, and requested that the Ministry takes time to especially “deal with the matter relating to conflict of interest” raised by the minority MPs.

“The Securities and Exchange Commission (SEC) should as a matter of public interest and securing the image of the government of Ghana and the Ministry of Finance should investigate the matter broadly and with dispatch,” Dr Gatsi said.

Commenting on the issue in an article titled: “What is external borrowing in the context of the issuance of the 2.25 billion euro bond and Ghana’s Public Borrowing Guidelines,” he argued the said bond cannot be said to be a local bond but rather external borrowing.

He underscored the need for the Finance Ministry’s explanation to be subjected to the Ghana’s Public Borrowing Guidelines, which was prepared taken into consideration the legal requirement using the provisions of the 1992 Constitution, the Loans Act, the Public Procurement Act, Financial Administration Act and Risk Management principles.

Section 3.1.1 of the Ghana’s Public Borrowing Guidelines explain external debt as “external debt is defined on gross basis at any given point in time as disbursed and contractual liabilities of the central government to nonresidents to repay principal, with or without interest, or to pay interest, with or without principal.

Basically, external debt is therefore the amount owed to creditors/lenders which are non-resident of the country. External borrowing sources are further segmented into four categories as; Multilateral, Bilateral, Commercial and Private”.

According to Dr Gatsi, It is clear from the facts that the bond is external borrowing, for which reason it “must comply with the approval requirements by cabinet and parliament as captured under Section 5.2 the Guidelines.

“Since the about 95% is indebted to non-resident creditor it is external borrowing. That external borrowing per the guideline has nothing to do with the currency in which it is issued,” he contended.

He said while the relevant regulatory bodies are required to do their work, “the bond [is] actually required to follow through the approval process”.