Ghana’s Finance Minister, Seth Terkper, has announced a dollar bond for domestic investors only with a target of $50 million.
The minister’s targets include dollar deposits in commercial banks earning little yield and retention by companies who earn in dollars but whose expenditure is in cedis.
Let me keep this short – it does not matter whether this bond is issued in the domestic or international market as long as it is not issued in cedis. It will be paid back in dollars which the government will have to get from foreign revenues or debt or it will have to change cedis into dollars to repay.
Perhaps the bonds are being issued on the domestic market because the minister expects to get cheaper rates than the international markets will offer. And a domestic dollar bond does not exactly signal confidence in the cedi even if the reason given by the minister is that it is to fund dollar commitments in the budget.