An analysis of the Ministry of Finance’s own Fiscal Accounts by the Institute of Fiscal Studies (IFS) — an economic policy think-tank — shows that loans secured domestically from the central bank to finance the budget deficit have been retired partly with proceeds from the Eurobond.

This contradicts the Finance Ministry’s own explanation that the Eurobond proceeds have been utilised for some development projects, while the remaining amount has been lodged in some designated government accounts with Bank of Ghana and is still part of government deposits at the central bank — especially when members of the country’s biggest opposition in parliament, led by Dr. Anthony Osei Akoto, have accused government of using the Eurobond proceeds to defray part of its debts owed the Bank of Ghana; an accusation the Ministry of Finance played down.

The Eurobond, due in January 2026, was sold at a coupon rate of 8.125 percent to raise capital from the international capital market to finance a number of infrastructure projects, refinance short-term expensive government domestic debt and counterpart funding requirements.

The 40-page review paper, which analyses the 2015 budget statement of the government said: “Proceeds of the US$1billion Eurobond money (equivalent to GH¢3,161.9 million) came in September 2014 as part of the foreign borrowing to finance the 2014 budget deficit. Up to August 2014, the Bank of Ghana had provided funds to finance the budget deficit.

“The Bank provided deficit financing of GH¢2,721.4million in quarter one (Q1), GH¢629.6million in Q2, and GH¢1,998.1million in July and August, bringing the total of the Bank’s financing for the deficit between January and August 2014 to GH¢5,349.1million.

“In September, the Bank of Ghana received payment amounting to GH¢2,998.6million out of the total GH¢3,289million borrowed from abroad, and GH¢3,161.9million the government borrowed from abroad to partly pay the debt owed to it.”

“Of the total GH¢3,289 million borrowed from abroad, GH¢3,161.9 — reflecting over 83 percent, was the Eurobond proceeds.

“Clearly, the GH¢2,998.6million paid to the Bank was most likely the Eurobond proceeds less transaction cost.”

According to the Finance Ministry, as of December 2014, only US$191million of the Eurobond proceeds had been expended since it was raised in the previous two months.

The ministry explained that an amount of US$200million was planned to be used for short-term debt re-financing, out of which a total disbursement of US$64,993,254 has been transferred to pay for maturing 3-year Government Bond totalling GH¢200million on 15th October, 2014: thus, leaving a balance of US$135.01million on this item.

The Finance Ministry further explained: “Secondly, an amount of US$250million was planned to be used for the Ghana Infrastructure Investment Fund (GIIF) Account. As at 24th October, 2014, the total amount had been transferred into the GIIF Account as a Seed Capital for the Scheme which will be commissioned in early 2015.

“Thirdly, an amount of US$250million was planned to be used to fund capital expenditure projects. A total of US$114.95million has been used to pay for various projects, leaving a balance of US$135.05million.

“Finally, an amount of US$288.71million was planned for Counterpart Funding. Nothing has been utilised so far under this component.

“Consequently, in sum, the total amount utilised so far is US$191.23million, leaving a total un-utilised amount of US$808.77million part of which is lodged into the various designated accounts as elaborated,” a statement from the Finance Ministry said.

But the Institute of Fiscal Studies contends that the statement by the Ministry of Finance detailing utilisation of the funds after concerns were raised by the minority group in parliament only confirms assertions that the money was not used for its intended purpose, adding: “What is worrying about the Eurobond issue is that the less the public knows about use of the proceeds, the easier it is for the funds to be used for other things unrelated to the purpose for which they were raised, and the less the risk of being held to account”.

The policy think-thank has thus called on government to provide the public with details of the utilisation of the September 2014 Eurobond proceeds, including specific projects that the government has in mind to fund, in the interest of transparency and accountability.

“They (government) should admit that this is what they have done with the Eurobond proceeds. As of now, they have not been able to cite a verifiable project that the money has been used for,” the Institute added.