Calls on the government to offload its stake in some major state assets have been rekindled, the latest calling on the current administration to dispose off part of its shares in some state-owned companies through the stock exchange to raise funds to undertake some major projects across the country. The Chief Executive Officer of a finance house, Forms Capital, Mr William Arthur, who made the latest call in an interview with the Daily Graphic in Accra, urged the government to consider exploring other sources of funds to enable it to refinance some of the maturing debts, while creating some fiscal space. Mr Arthur ruled out the option of Eurobonds because that would come with higher interest (coupon) rates. Initial state-owned enterprises (SoEs) to consider should include the Tema Oil Refinery (TOR) and the Ghana Gas Company Ltd, saying, “These must go to private people to run and not the government.” Proceeds from state assets Mr Arthur explained that once the state offloaded interest in those assets, the proceeds realised should be spent on projects that would be awarded through transparent procurement processes, adding: “nothing should be done in secrecy to raise eyebrows.” He also explained that using the local bourse to float government stake would allow citizens part-owners of state assets. “The government can float part of the shares on the local bourse for both institutions and individuals to own shares in the companies. “The government can also consider inviting strategic investors, through a transparent process, to take part of the companies. The government has no business in running those companies,” he said. Debt profile The country is saddled with huge debt hovering around GH¢120 billion, representing 72 per cent of the Gross Domestic Product (GDP). The debt is said to be suffocating the new administration, which seems to have no fiscal space to operate efficiently. Bond market On the issue of bonds, Mr Arthur said cheaper bonds had been floated in other parts of the world and mentioned the Panda bonds which were issued in the Chinese currency as one that attracted a coupon rate of not more than three per cent in many instances. He said Eurobonds were over-priced and hurt the economy and noted that until the country looked elsewhere, “we will continue to reel under debt because the Eurobonds we go for are too expensive”. The call comes at a time when the Finance Minister has dropped hints of hitting the Eurobond market to raise funds. It is not yet clear how much the government intends to take, but sources say depending on the coupon rate, it may go for not less than $1 billion. Help for private sector Mr Arthur described the intention of the government to make the private sector vibrant again as refreshing and welcome news. “The private sector must thrive again and this can be done if the government creates the enabling environment for us,” he said. He advised the Finance Minister to “put in place a risk management plan to respond more effectively to the emerging risks and the tightening of the global financial market”. NPLs Reports point to the fact that the government was indebted to contactors alone to the tune of more than GH¢17 billion. This is said to be having a serious toll on the financial institutions which lent money to the contractors to undertake some government projects across the country. According to Mr Arthur, the situation was dire and urged the government to act on it, saying “the government has to release the money to the contractors to pay their financiers to improve our liquidity”. He added that “while those in the private sector expect to have more reliable power to produce efficiently and help boost growth, we also call on the government to clear the debt in the energy sector to help reduce non-performing loans (NPLs) on the books of financial institutions,” he said.
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