UPDATE 1-Ghana cabinet approves $1 bln Eurobond for July - fin min

Thu May 23, 2013 2:52pm EDT

ACCRA May 23 (Reuters) - Ghana's cabinet has approved a Eurobond issue of up to $1 billion tentatively scheduled for July, Finance Minister Seth Terkper said on Thursday.

"Based on anticipated market conditions and financing needs, a transaction size of up to $1 billion was recommended to, and approved by, cabinet," Terkper told reporters, adding that Citigroup and Barclays had been appointed lead managers on the deal.

He also named Accra-based Ecobank Development Corporation and Strategic African Securities as co-managers of the bond, which the government said would be used for capital expenditures and refinancing public debt to reduce cost of borrowing.

Terkper said the government was considering additional measures including tax hikes and regular adjustment in utility prices to boost revenue for the year after provisional data showed shortfalls in first quarter revenue target.

The government would also review the implementation of a public sector pay package which has taken a huge toll on the economy, he said, adding that the current size of the wage bill which takes up 60 percent of the total national budget was "unsustainable".

"We have come to a point where we cannot continue at the current pace," Terkper said. "It is not only unsustainable but it is also creating distortions within the public sector wages."

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