Financing capital projects in Ghana: The choice of Eurobonds over loans from international development partners

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This study explored the various reasons or factors behind using Eurobond as against loans from development partners such as the World Bank (WB), International Monetary Fund (IMF) and the African Development Bank (AfDB), in financing capital projects in Ghana. In addition, the study examined the impact of how these factors could predict the financial choice as well as the various measures put in place to benefit from using this type of debt instrument. This study came at a time, where many developing countries like Ghana have limited access to loans from development partners for improving its income status from a lower income status to a lower middle income country. The study gathered data from a sample of four policy makers and a policy analyst, through the use of interviews and a questionnaire. Findings were generally consistent with the literature. The economic global interest rate, loan currency, size of funds and maturity of projects as well as the economic environment are relevant factors when the government of Ghana intends to borrow externally. However, the policies available are not strong enough, if it is not effectively implemented. The study recommends that policy makers should make prudent borrowing decision which is consistent with road macroeconomic policy by ensuring that projects present value is less than equal to the loan disbursed to manage its debt burden.
Thesis submitted to the Department of Business Administration, Ashesi University College, in partial fulfillment of Bachelor of Science degree in Business Administration, April 2014
Ghana, loans, Eurobond, capital projects, debt