September 3, 2018 / 9:48 AM / 2 months ago

UPDATE 2-Ghana considering $50 bln century bond, president says

(Adds deputy finance minister comments, context)

By Kwasi Kpodo

ACCRA, Sept 3 (Reuters) - Ghana may issue a 100-year $50 billion bond as part of a long-term industrialisation plan that aims to wean the West African country off aid, its president said during a meeting with Chinese President Xi Jinping.

The government, in power since January 2017, has said it needs about $2 billion a year for infrastructure spending. Ghana, which exports cocoa, gold and oil, is in its final year of a $918 million IMF credit programme.

President Nana Akufo-Addo said during a meeting with Xi in Beijing on Sunday: “The Ministry of Finance and economists in Ghana are looking at floating a $50 billion century bond. This will provide us with the resources to finance our infrastructural and industrial development.”

The announcement drew scepticism in financial markets, with analysts expressing doubts over Ghana’s capacity to undertake such a transaction.

“While the estimate of Ghana’s likely infrastructure investment need over the next century may well total more than $50 billion, Ghana’s ability to raise anything like $50 billion in a single issue is doubtful, given the country’s current financing capacity,” said Standard-Chartered Bank chief economist Razia Khan.

Deputy Finance Finister Charles Adu Boahen told Reuters discussions on the bond were at an early stage and that the plan was to raise the amount over a period and possibly in different currencies based on investor appetite and planned uses.

Ghana, which exports cocoa, gold and oil, is in its final year of a $918 million deal with the International Monetary Fund to narrow its deficit, spur growth and cut debt, which ratings agency Moody’s estimates will rise above 70 percent of gross domestic product by December.

Akufo-Addo’s delegation also finalised a deal with Sinohydro Corp Ltd to provide $2 billion for government road and railway projects in exchange for refined Ghanaian bauxite, Nkrumah said.

The two countries also finalised a deal between China Harbour Engineering Company and Africa-focused private equity firm Helios on building a $350 million liquefied natural gas terminal in Ghana’s eastern Tema port. (Reporting by Kwasi Kpodo Editing by Louise Ireland)

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