ACCRA– The Ghana Parliament has approved government’s 2.5 billion dollar Eurobond to finance major government infrastructure.

The proceeds of the bond are expected to finance the provision of capital expenditure captured in this year’s (2018) budget for sectors such as the health, roads & highways and railway.

This was after parliament approved the report from the Finance Committee to aid the funding raising exercise.

Finance Minister Ken Ofori Atta in the 2018 budget presentation stated that the government will raise the amount as it has become necessary to develop the beneficiary sectors.

The documents showed that: $1 billion would be used to finance the 2018 Budget and $1.50 billion to refinance maturing external bond that is the 2022 and 2023 Eurobonds.

According to government, it is planning to issue the bonds before the close of April 2018 in order to enjoy the current favourable market conditions.

The 2018 budget approved by parliament last year indicated that its intention to raise up to $1 billion from the international capital market to finance capital expenditure.

It also stated that government will further access the international market for liability management operations such as buybacks and bond refinancing to re-profile external debt, extend tenors and reduce associated refinance risks.

Since 2007 Ghana has issued 5 Eurobond on the International Capital Market.

Government also intends to issue the 2018 sovereign Bonds and Global Depository Note to enable it to support the 2018 budget and to refinance the profile some of the existing stock, according to Government.

The finance committee of parliament was of the view that government intends to take advantage of the current low yields averaging 16.5 percent to refinance expensive bonds used between 2015 and 2017 at an average yield of 24 percent.

According to the finance committee, the sovereign bonds will include regular Eurobond, as well as Panda, Green and or Samurai bonds depending on market conditions.

A Panda Bond is a Chinese Renminbi-Denominated bond from a non-Chinese Issuer, sold in China.

A samurai bond is a yen-denominated bond issued in Tokyo by non-Japanese issues, providing the issuer with access to the Japanese capital.

The finance committee was of the view that the offshore RMB and yen Proceeds can give Ghana the RMB/YEN balance sheet to reduce the mismatch in external currencies.

According to government, it is planning to direct the funds to these areas, Irrigation infrastructure, Rehabilitation of Warehouses and Silos, Fisheries and Aquaculture Inputs, Education Infrastructure, Road Infrastructure, Rail Infrastructure

Meanwhile Parliament has approved the equivalent of a 500 million cedi to be issued as global depository notes.

The notes will allow Ghana to issue shares in a foreign company which will be held by a foreign branch of an international bank.