Finance Minister-designate, Ken Ofori-Atta, has said that government’s decision to bring back what has become a rather controversial transaction, the Agyapa Royalties deal, to parliament is its potential of bringing in revenue which will effectively reduce government’s borrowing.
The country’s finances have been further messed up by the pandemic related spending, as the 2021 budget states that government overspent its 2020 budget by GH¢11.7 billion and also suffered revenue shortfall of GH¢13.6 billion. This effectively has shot up the public debt figure to GH¢291.6 billion, representing 76.1 percent of GDP as of December 2020.
Answering questions regarding what motivated government to consider taking the deal back to parliament for more scrutiny after it was suspended following corruption assessment risk by the Office of the Special Prosecutor, the minister-designate, noted that the current global economic challenges emanating from the coronavirus pandemic has left many countries heavily indebted, hence, the need for Ghana to devise innovative means to bring in more revenue that will eventually reduce borrowing.
“I think all of us are looking at the state of the economy with a new normal which seems to be global with regards to debt and we are looking to inject equity into the way in which the country grows.
The challenge for all of us is that as we look at the new normal in which there seems to be quite a bit of debt by all countries, what do we do with our natural resources to leverage into equity? That is a question we have to face. Philosophically, I hope that we all come to terms with the reality of diversifying how we capitalise and fund our transformation.
Imagine that we have this royalty company which maybe in 20 or 30 years can become a US$30 billion company and we have about 50 percent of it. Imagine putting this balance sheet to the Bank of Ghana, what then happens? Immediately, we literally have a reserve currency and it will address this whole issue of currency depreciation etc. But then we have these assets sitting because the language we have as a nation does not embolden anyone to be able to examine these things,” he said at the vetting.
He urged all stakeholders to look at the long-term benefits of the transaction to the country and refrain from passing comments that only seeks to discredit the deal without basis.
Per the information made available about the deal, Agyapa Rolyalties Ltd is a Special Purpose Vehicle (SPV) created by the Minerals Income Investment Fund (MIIF) with the key objective of maximising the county’s mineral wealth by trading on the London Stock Exchange, among others.
The Agyapa Royalties deal received a lot of backlash, with many expressing concerns about its transparency and beneficial owners who may be politically exposed persons. Another criticism against the deal suffered is the fact that the company was incorporated in a British Channel Island, Jersey, where it will enjoy tax reliefs on transfer of dividends and other incomes it will generate from the deal.
President Nana Addo Dankwa Akufo-Addo indicated his government’s intention to take the Agyapa Royalties deal back to Parliament for review after it was suspended last year following concerns and red flag raised by members of opposition, civil society organisations, and other stakeholders.