This year, government envisages to set aside GHc 1.0 billion, which would be used as a cash buffer for its cash management operations.
This is line with plans to build buffers for cash management purposes, following the zero –financing of government operations by the Bank of Ghana (BoG), which is still in force. Prior to the implementation of zero financing of the BoG, the central bank usually provided government with emergency liquidity when needed, especially to meet repayments of maturing debts.
According to the government’s 2019 Annual Borrowing Plan, government is expected to forestall any financing imbalances as well as ensure that any contingent liability that hits its cash flow would be securitized or cash payments made as and when the liquidity position makes it possible to do so.
The cash buffers may be a resort for government to mitigate short-term financing challenges in the course of the fiscal year. This requires that government take more money off the financial markets than it requires immediately, so that it has a cash reserve to meet unforeseen needs or to take advantage of emergent financial market opportunities
In line with the debt management objective of developing the domestic debt market, 2019 is expected to witness the issuance a wide range of instruments of different tenors from short-term(91, 182 and 364 day Treasury Bills), medium-term ( 2-year Notes, 3 to 7 year Bonds) and long-term securities.
For this first quarter, government expected to issue debt securities to the tune of GHc 11,250 million, of which GHc10, 149.84 million is to rollover maturities. The remaining GHc1, 100.16 million is to meet Government’s financing requirements and cash buffer for the period.
However, government has been hard put to meet its debt securities issuances targets because of reticence by foreign investors and this has put pressure on the cedi. A cash buffer, once in place could be used to cover the shortfalls while they occur.
, Government has also issued US$ 3 billion worth of Eurobonds comprising three segments, each of which will mature over three various periods of time. The three tranches come at maturity periods of seven years with 8.75 percent coupon rate;12 years with 8.125 percent coupon rate, and 31 years with 8.95 percent coupon rate.
Part of this will form a buffer which can be used to meet unforeseen financing needs, cover revenue shortfalls or take advantage of financial market opportunities as they emerge. For instance part of the buffer may be used to buy back some of the Eurobonds Ghana issued a couple of years ago since the country has been able to raise issue new bonds at lower rates and longer tenors.
By Joshua W. Amlanu