Home Business Franklin Templeton not a person – Finance minister corrects NDC MPs

Franklin Templeton not a person – Finance minister corrects NDC MPs

Finance Minister, Ken Ofori-Atta has corrected National Democratic Congress (NDC) Parliamentarians who are under the impression that global investment firm Franklin Templeton, is a person.

The correction came on the floor of parliament Wednesday, where he explained the raising of $2.5bn on the international market last April.

The Finance Minister said, contrary to accusations by some NDC MPs that “government is selling all our bonds to one person”, Franklin Templeton is one of the world’s largest asset management firms with over $850m in assets.

Some NDC MPs led by the Minority Leader Haruna Iddrisu, claimed Franklin Templeton was a person.

But “for the avoidance of doubt, Franklin Templeton is not a person” the investment banker-turned politician said in parliament.

He also explained that the 95% of the bonds bought by Franklin Templeton is not odd as claimed by the Minority.

This is because, in 2016 under the NDC government now a Minority in Parliament, Franklin Templeton bought heavily into Ghana’s bonds.

The Minority had also claimed there could be conflict of interest in the deal because Templeton Group has a position on the Board of Enterprise Group Limited, a company co-founded by the Finance Minister.

The Finance Minister was at pains to stress, the rules surrounding bond issuance make it highly unlikely for government officials to have any direct relationship with investors.

He said this is because the bonds are bought by individuals only through licensed financial institutions.

Rejecting claims after claims, the Finance minister said there was “no inherent insider dealing” in issuing the bond because it is only through transparency that foreign investors can express interest in the long-term financial instrument.

Ken Ofori-Atta also spent time to eventually dismiss claims raised by the Minority that the bond was denominated in dollars which weakens the cedi.

The Minister said, the Minority may have had that impression because “the high participation of foreign investors created false impression that it was a US dollar denominated bond”.

He stated “categorically that the bonds were denominated and issued in Ghana cedis…they were not dollar bonds” and expressed delight that using melting dollars to buy cedis will strengthen the local currency.

He explained the bond had low domestic investor participation because historically, they shun long-term investments such as this bond which matures in 15-years.

Ken Ofori-Atta said the world hailed the government for pulling off the “single biggest daily transaction in sub-Saharan Africa”.

But he came home to find the Minority making “big issues out of a non-issue”.

He indicated that the query from the Minority is much ado about nothing because, the process used by the previous administration to raise money on the international market is the same process adopted by the new government.

The only difference is that the results are better and investor confidence in Ghana is greater.

He tried to give the NDC MPs the benefit of the doubt saying it could be that their concerns were “genuinely borne out of a lack understanding of the actual process”.

Nonetheless  this view “may be deemed too charitable because the CVs of some of the persons involved are very, very strong”.

Why government raised the bond

Laying down his facts, the Finance Minister said government is saddled with the payment of 10 billion cedis as its annual interest payment on past loans.

Breaking it down, government needs to cough up 1bn cedis on a weekly basis to service domestic debts. This amount is a 100% increase from what used to be the case in 2014. One billion cedis chews off one-third of the monthly tax revenue collected by the Ghana Revenue Authority.

Ghana once with a total debt of 36bn cedis in 2012, had a debt burden of 122bn cedis in 2016.

He said for the past NDC government, the plan to deal with this debt is to “borrow more, tax more” which had ” the obvious consequence of worsening the debt burden”.

The depressing economic situation affected the purchasing power of Ghanaians, triggered job losses in an atmosphere of austerity and weakened the currency, he said.

This burden also leaves government with “very little cash” for essential social services.

The new NPP government, he said, “had no choice” but to “think outside the box” by designing a financial instruments which he said, do not raise the debt burden in any way.