Ghana plans to issue green and social bonds of up to $2 billion by November, making it the first African country to refinance debt to fund development programs.
A green bond is a fixed-income instrument designed particularly to raise funds for climate and environmental projects. Because these bonds are usually asset-linked and backed by the issuing entity’s balance sheet, they normally have the same credit rating as the rest of the issuer’s debt obligations. Due to the COVID-19 pandemic, this instrument has grown in popularity. With these earnings, Ghana hopes to continue with its free secondary school program amongst other social programs.
The expectation is that the bonds will be issued in the fall and the maximum can be $2 billion,” after Ghana already sold $3.03 billion in March out of the $5 billion for which it has budget approval, Ofori-Atta said. Out of the total, $3.5 billion will be used to refinance debt already raised. “Our actual new debt will be $1.5 billion,” said Ghanaian Finance Minister Ken Ofori-Atta.
