The Minority in Parliament has attributed Ghana’s ballooning public debt situation partly to fees earned by Databank, a financial institution connected to Finance Minister Ken Ofori Atta.
According to them, government’s unrestrained borrowing is heavily influenced by the benefits derived from bonds in the form of commission by Databank which is currently serving as a book runner on government’s bonds.
Minority Leader Haruna Iddrisu told the press in Accra on Tuesday September 1, 2020 that transactions in the forms of bonds and other financial agreements are motivated by fees which are certain and paid up front.
“These fees partly explain the rapid growth in public debt. A key driver of the ballooning public debt under the Akufo-Addo government is the fees earned by the Finance Minister’s company, Databank,” he said.
The minority leader stated further that Databank has also been a Co-Manager of Ghana’s Eurobond transactions since 2017 adding “the selection of Databank Brokerage Limited as a book runner means that Databank profits every time the Government issues bonds on the domestic market. The actual commission is not based on the debt stock but on gross issuance (including refinancing) on the domestic market which in 2019 alone amounted to whopping GHc64.0 billion”.
“During this period, Ghana has issued $5 billion in Eurobonds, with commissions and fees paid to Lead Managers and Co-Managers,” he stressed.
While raising concerns over a conflict of interest situation, Mr. Haruna Iddrisu said “It is difficult to see how the Minister can be restrained from borrowing for Ghana if his firm benefits on a commission each time the government issues domestic bonds or Eurobonds”.
