Raise funds from stock market — Terkper urges businesses

The Minister of Finance, Mr Seth Terkper, has admitted the dearth of long-term financing on the local market, is partly because of the government’s own borrowing from the short-term market.

Mr Terkper said there was the need for more competition, efficiency and effective planning so borrowing rate could go down.

“There is a phenomenon where businesses go to banks to borrow rather than capital markets or stock exchange. Only few go to the stock, which should be the agency that provides long-term borrowing; corporate bonds which would have been the best way to finance long term but we hardly issue them in Ghana. So the long-dated bond which we are going to put on the stock market, would be the first step and then you can bring the private sector, corporate bond and then the municipal bonds,” he said.   

He added that the Ghanaian capital markets needed to be developed, especially, the long term and not just the short term.  

Mr Terkper made the presentation on the “State of the Ghana Economy-Recent History and Immediate Prospects” at a forum in Accra. The event was jointly organised by the School of Law, Business School, Institute of Statistical, Social and Economic Research (ISSER) and the Department of Economics, all of the University of Ghana, Legon. 

Strategy

He said the government was working to address short-term challenges the economy was facing in order to safeguard the bright prospects.

It has therefore taken the necessary steps and remains committed to stabilising the economy and achieving its medium-term macroeconomic objectives.

He said the Ghanaian economy had a very bright medium-term prospect supported by an expanded services sector; the discovery of more oil and gas fields (TEN and Sankofa) and the coming on stream of the country’s own gas processing plant.

 “First of all, the services sector continued to perform well. Secondly, our consolidation efforts and solution to problems of subsidies and power situation and others keep improving. But beyond the short-term measures, we also have a services sector that continues to grow. We have the opportunity of gas in particular. As we speak, the second FPSO is under construction and the naming will take place at the end of this month,” he said.

That, he said, would bring additional crude oil and gas to add to the Jubilee gas.

Prospects of gas projects

Touching on the recent US$940 million IMF bailout that the country recently got, Mr Terkper said the programme was expected to consolidate economic gains on the back of the prospects of oil and gas production.

“Under the IMF programme, the country is on course so we have to sustain it so we can end at the time that we are consolidating power and gas and the economy will start growing again,” he said.

He said if the country was producing gas it should be able to spur investments, explaining: “If we produce our own gas and we are not able to pay for it we cannot do more investments and that explains why the Electricity Company of Ghana (ECG) and Ghana Water Company (GWC) are moving to the prepaid meter regime.”

He added: “It doesn’t mean we are commercialising everything but there are critical social intervention areas for which Ghana Education Trust Fund (GET Fund), for which DACF, and others must be designed to fit in,” he said.

 Overview of the economy 

He said since 2013, government has been implementing a number of measures to address the causes of fiscal overruns in 2012 and ensure macroeconomic stability and a consolidation of our lower middle-income status.
He said significant progress has been made in addressing the nation’s macroeconomic challenges despite the setbacks such as commodity price shocks (decline in cocoa, gold and oil price) and energy challenges that the country has faced in the past two years.
“The fiscal deficit has reduced from 11.5 per cent of Gross Domestic Product (GDP) in 2012 to 10.2 per cent in 2014 and it is projected to decline further to 7.3 per cent in 2015. The recent review of Ghana’s performance under the Extended Credit Facility (ECF) programme with the International Monetary Fund (IMF) attests to this,” he said.