Archive forSmart Borrowing

House Education & Workforce Committee Issues Report on Empowering Students Through Enhanced Financial …

The Committee believes providing to parents the same information and disclosures students receive prior to taking out a loan is crucial for encouraging smart borrowing and on-time repayment. The Empowering Students through Enhanced Financial …

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Smart borrowing tips to help families pay for college

1 Keep it Clean. Please avoid obscene, vulgar, lewd, racist or sexually-oriented language. PLEASE TURN OFF YOUR CAPS LOCK. 2 Don't Threaten.

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First Marblehead to Release Second Quarter Fiscal 2016 Financial Results and Host Con…

First Marblehead to Release Second Quarter Fiscal 2016 Financial Results and Host Conference Call

February 01, 2016: 04:00 PM ET

The First Marblehead Corporation (NYSE: FMD) plans to release its second quarter fiscal year 2016 financial and operating results for the three and six month periods ended December 31, 2015 after the market closes on Tuesday, February 9, 2016. The Company will host a conference call at 5:00 p.m. Eastern time on Tuesday, February 9, 2016 to discuss its results and provide an update on the Company’s business. First Marblehead’s Chairman and Chief Executive Officer Daniel Meyers and Chief Financial Officer Alan Breitman will host the call.

Investors and other interested parties are invited to listen to the conference call via a simultaneous internet broadcast on the Company’s website at www.firstmarblehead.com, under “For Investors,” or by dialing (888) 317-6003 from the United States or (412) 317-6061 from abroad and entering the pass code 8495222.

A replay will be available approximately one hour after completion of the call on First Marblehead’s website or by dialing (877) 344-7529 from the United States or (412) 317-0088 from abroad and entering the pass code 10079934. The replay will be available for two weeks.

About The First Marblehead Corporation First Marblehead helps meet the need for education financing by offering national and regional financial institutions and educational institutions the Monogram®
platform, an integrated suite of design, implementation and credit risk management services for private label, customizable private education loan programs. For more information, please see www.firstmarblehead.com. First Marblehead supports responsible lending and is a strong proponent of the smart borrowing principle, which encourages students to access scholarships, grants and federally-guaranteed loans before considering private education loans; please see www.SmartBorrowing.org. First Marblehead also offers outsourced tuition planning, billing, payment technology services and refund management services through its subsidiary Tuition Management Systems LLC. For more information, please see www.afford.com. Through its subsidiary, Cology LLC, First Marblehead offers private education loan processing and disbursement services for lenders. For more information, please see www2.cology.com.

 

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First Marblehead Announces Second Quarter Financial Results

First Marblehead Announces Second Quarter Financial Results

Results From Continuing Operations Improved 62% February 09, 2016: 04:05 PM ET

The First Marblehead Corporation (NYSE: FMD) today announced its financial and operating results for the second quarter of fiscal 2016 as well as the six month period ended December 31, 2015.

For the second quarter of fiscal 2016, the Company recorded a net loss from continuing operations of $4.9 million, or $(0.41) per share, compared to a net loss from continuing operations of $12.9 million, or $(1.12) per share, for the second quarter of fiscal 2015, a 62% improvement. Total expenses for the second quarter of fiscal 2016 were $17.8 million, a $6.3 million, or 26%, improvement compared to total expenses of $24.1 million for the second quarter of fiscal 2015, which included a one-time charge of $5.0 million related to the NC Residuals legal settlement. Total expenses for the three months ended December 31, 2015 also declined due to decreases in compensation and benefits expenses of $763 thousand, occupancy costs of $681 thousand and travel and entertainment costs of $256 thousand. Revenues for the second quarter of fiscal 2016 increased $1.7 million, or 15%, to $12.9 million as compared to the second quarter of fiscal 2015. The improvement in revenues for the three months ended December 31, 2015 included increases of $714 thousand in tuition management fees from the Company’s subsidiary Tuition Management Systems LLC, $478 thousand in Monogram®-based fee revenues, $384 thousand in fee income from the Company’s subsidiary Cology LLC and $83 thousand in portfolio management services fees as well as an increase of $52 thousand in fair value changes to service revenue receivables. The increase in revenues and decrease in expenses resulted in a $7.7 million, or 62%, improvement in net operating cash usage*, a non-GAAP financial measure, for the second quarter of fiscal 2016 as compared to the second quarter of fiscal 2015.

For the six month period ended December 31, 2015, the Company recorded a net loss from continuing operations of $11.0 million, or $(0.94) per share, compared to a net loss from continuing operations of $23.4 million, or $(2.04) per share, for the six month period ended December 31, 2014. The improvement in the net loss from continuing operations was primarily due to an $8.4 million decrease in total expenses, principally the result of a one-time charge of $5.0 million during the second quarter of fiscal 2015 related to the NC Residuals legal settlement. Total expenses for the six month period ended December 31, 2015 also declined due to decreases in compensation and benefits expenses of $2.5 million, lower occupancy costs of $1.0 million and lower third-party services expenses of $916 thousand, principally related to lower legal fees pertaining to certain tax matters. Revenues for the six month period ended December 31, 2015 increased $4.1 million, or 16%, to $29.4 million. The improvement in revenues for the six month period ended December 31, 2015 included increases of $1.8 million in tuition management fees from TMS, $1.2 million in Monogram-based fee revenues, $744 thousand in fee income from Cology LLC and $473 thousand in portfolio management services fees, partially offset by a decrease of $119 thousand in fair value changes to service revenue receivables.

For the second quarter of fiscal 2016, total facilitated private education loan volumes were $172.1 million, which consisted of $13.3 million of Monogram-based loans and $158.8 million of loans facilitated by Cology LLC, which was relatively unchanged for our Monogram-based programs and was a 52% increase for Cology LLC over the same quarter of the prior year. Loan disbursements for the second quarter of fiscal 2016 totaled $163.8 million, which consisted of $19.1 million of Monogram-based loans and $144.7 million of loans disbursed by Cology LLC, which was relatively unchanged for our Monogram-based programs and was a 40% increase for Cology LLC over the same quarter of the prior year. 

For the six month period ended December 31, 2015 total facilitated private education loan volumes were $682.0 million, which consisted of $110.5 million of Monogram-based loans and $571.5 million of loans facilitated by Cology LLC, which represented increases over the six month period ended December 31, 2014 of 13% and 23%, respectively. Loan disbursements for the six month period ended December 31, 2015 totaled $489.8 million, which consisted of $72.3 million of Monogram-based loans and $417.5 million of loans disbursed by Cology LLC, which represented increases over the six month period ended December 31, 2014 of 17% and 32%, respectively.

The increase in Monogram-based loan volume for the six month period ended December 31, 2015 was a result of a stronger credit mix of applicants, which led to an improved application conversion rate while the increase in Cology LLC loan volume for the three and six months ended December 31, 2015 was primarily the result of organic growth at existing clients, including new loan programs. 

“We are pleased with our second quarter fiscal 2016 results, as we continued with the trend of higher revenue growth in conjunction with lowered operating expenses,” said Daniel Meyers, Chairman and Chief Executive Officer.

Company Liquidity

As of December 31, 2015, the Company had cash and cash equivalents and short-term investments of $49.1 million compared to $63.0 million at June 30, 2015. The decrease of $13.9 million was primarily the result of $6.6 million used to fund continuing operations coupled with fundings of $5.2 million for participation interest accounts, which represents what the Company believes to be approximately 68% of its fiscal 2016 obligation, and the remaining change of $2.1 million was a result of cash outflows primarily for accrued expenses and prepaid assets.

* See below under the heading “Use of Non-GAAP Financial Measures.”

Quarterly Conference Call

First Marblehead will host a conference call on Tuesday, February 9, 2016 at 5:00 p.m. Eastern Time to discuss its operating results. Investors and other interested parties are invited to listen to the conference call via a simultaneous internet broadcast on the Company’s website at www.firstmarblehead.com, under “For Investors,” or by dialing (888) 317-6003 from the United States or (412) 317-6061 from abroad and entering the pass code 8495222. 

A replay will be available approximately one hour after completion of the call on First Marblehead’s website or by dialing (877) 344-7529 from the United States or (412) 317-0088 from abroad and entering the pass code 10079934. The replay will be available for two weeks.

About The First Marblehead Corporation First Marblehead helps meet the need for education financing by offering national and regional financial institutions and educational institutions the Monogram® platform, an integrated suite of design, implementation and credit risk management services for private label, customizable private education loan programs. For more information, please see www.firstmarblehead.com. First Marblehead supports responsible lending and is a strong proponent of the smart borrowing principle, which encourages students to access scholarships, grants and federally-guaranteed loans before considering private education loans; please see www.SmartBorrowing.org. First Marblehead offers outsourced tuition planning, billing, payment technology services and refund management services through its subsidiary Tuition Management Systems LLC. For more information, please see www.afford.com. Through its subsidiary, Cology LLC, First Marblehead offers private education loan processing and disbursement services for lenders. For more information, please see www2.cology.com.

Statements in this press release, including the financial tables, regarding First Marblehead’s future revenue, expenses and other financial and operating results and liquidity, as well as any other statements that are not purely historical, constitute forward-looking statements for purposes of the safe harbor provisions of The Private Securities Litigation Reform Act of 1995. These forward-looking statements are based upon our historical performance, and on our plans, estimates and expectations as of February 9, 2016. The inclusion of this forward-looking information should not be regarded as a representation by us or any other person that the future results, plans, estimates, intentions or expectations expressed or implied by us will be achieved. You are cautioned that matters subject to forward-looking statements involve known and unknown risks and uncertainties, including economic, legislative, regulatory, competitive and other factors, which may cause our actual financial or operating results, or the timing of events, to be materially different from those expressed or implied by forward-looking statements. Important factors that could cause or contribute to such differences include: market acceptance of, and demand for, our Monogram platform and fee-based service offerings, including our success in negotiating loan program agreements with additional clients; the successful sales and marketing of Monogram-based loan offerings, including the volume of loan applications and the extent to which loan applications ultimately result in disbursed loans; the volume, timing and performance of disbursed loans; the size and structure of any credit enhancement provided by First Marblehead in connection with our Monogram platform; the successful sales and marketing of the products and services offered by Tuition Management Systems LLC and Cology LLC; other changes to our business model or business effects, including the effects of industry, economic or political conditions outside of our control; capital markets conditions and our ability to structure securitizations or alternative financings; the size, structure and timing of any such securitizations or alternative financings; our ability to further reduce our operating expenses without adversely affecting our business; resolution of litigation and regulatory proceedings pertaining to our Massachusetts state income tax returns; the estimates and assumptions we make in preparing our financial statements, including quantitative and qualitative factors used in determining the estimate of the fair value of service revenue receivables and deposits for participation interest accounts; and the other factors set forth under the caption “Part II – Item 1A. Risk Factors” in First Marblehead’s quarterly report on Form 10-Q filed with the Securities and Exchange Commission on November 9, 2015. Important factors that could cause or contribute to future adjustments to the estimates and assumptions we make in preparing our financial statements include: actual transactions or market observations relating to asset-backed securities, loan portfolios or corporate debt securities; variances between our performance assumptions and the actual performance of the loan portfolios held by the GATE trusts or First Marblehead’s clients (the “Portfolios”); economic, legislative, regulatory, competitive and other factors affecting discount, default, recovery and prepayment rates on the Portfolios, including general economic conditions, the consumer credit environment and unemployment rates; management’s determination of which qualitative and quantitative factors should be weighed in our estimates, and the weight to be given to such factors; the receptivity of capital markets to securities backed by private education loans; interest rate trends; and the resolution of litigation and regulatory proceedings pertaining to our Massachusetts state income tax returns. We specifically disclaim any obligation to update any forward-looking statements as a result of developments occurring after the date of this press release, even if our estimates change, and you should not rely on those statements as representing our views as of any date subsequent to the date of this press release.

The following tables present our private education loan facilitation metrics with respect to our Monogram-based loan programs for the three and six months ended December 31, 2015 and 2014, excluding our former bank subsidiary Union Federal Savings Bank for the three and six months ended December 31, 2014, as well as the private education loans processed by Cology LLC for these periods. We use the term “facilitated loan” to mean an education loan that has been approved following receipt of all applicant data, including the signed credit agreement, required certifications from the school and applicant and any required income or employment verification. We use the term “disbursed loan” to mean a loan for which loan funds have been disbursed on behalf of the lender. Historically, we have processed the greatest loan application volume during the summer and early fall months, as students and their families seek to borrow money in order to pay tuition costs for the fall semester or the entire academic year.

Use of Non-GAAP Financial Measures

In addition to providing financial measurements based on U.S. generally accepted accounting principles (“GAAP”), the Company has included in this press release an additional financial metric that it refers to as “net operating cash usage” that was not prepared in accordance with GAAP. The Company defines “net operating cash usage” to approximate cash requirements to fund its operations. “Net operating cash usage” is not directly comparable to the Company’s consolidated statements of cash flows prepared in accordance with GAAP. Legislative and regulatory guidance discourage the use of, and emphasis on, non-GAAP financial metrics and require companies to explain why a non-GAAP financial metric is relevant to management and investors.

The Company’s management and its board of directors use this non-GAAP financial metric, in addition to GAAP financial measures, as a basis for measuring and forecasting the Company’s core operating performance and comparing such performance to that of prior periods. This non-GAAP financial measure is also used by the Company in its financial and operational decision-making.

The Company believes that the inclusion of this non-GAAP financial metric helps investors to gain a better understanding of its results, including its expenses and liquidity position. In addition, the Company’s presentation of this non-GAAP financial measure is consistent with how it expects that analysts may calculate their estimates of its financial results in their research reports and with how clients, investors, analysts and financial news media may evaluate its financial results.

There are limitations associated with reliance on any non-GAAP financial measure because any such measure is specific to the Company’s operations and financial performance, which makes comparisons with other companies’ financial results more challenging. Nevertheless, by providing both GAAP and non-GAAP financial measures, the Company believes that investors are able to compare its GAAP results to those of other companies, while also gaining a better understanding of its operating performance, consistent with management’s evaluation.

“Net operating cash usage” should be considered in addition to, and not as a substitute for, or superior to, financial information prepared in accordance with GAAP. “Net operating cash usage” excludes the effects of income taxes, acquisitions or divestitures, participation interest account fundings and changes in other assets and other liabilities that are solely related to short-term timing of cash payments or receipts.

In accordance with the requirements of Regulation G promulgated by the Securities and Exchange Commission, the table below presents the most directly comparable GAAP financial measure, loss from continuing operations, before income taxes, for the three and six months ended December 31, 2015 and 2014 and reconciles the GAAP measure to the comparable non-GAAP financial metric:

 

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Meridian Offers One-Year Fixed Mortgage at 1.69%

TORONTO, Feb. 2, 2016 /CNW/ – Meridian, Ontarios largest credit union, today announced it is offering Ontarians the lowest posted fixed mortgage rate on the market today at 1.69 per cent for a one year term.#160;

Meridian is going against the trend set by banks and lenders of raising their fixed mortgage rates, says Bill Whyte, Chief Member Services Officer for Meridian.#160; As a Member-owned financial institution, we are able to take advantage of the current bond and lending environment and pass those savings onto our Members.

Meridian mortgage specialists work closely with Members to help ensure they are well informed about the financial facets of home ownership, including home affordability guidelines and smart borrowing practices.#160;

In addition to this attractive one-year fixed #160;mortgage offering, Meridian offers a full suite of mortgage options including fixed, variable, mortgages for business owners and construction mortgage solutions, added Whyte.#160; As we are quickly approaching the busy spring home buying season, this is the perfect time for people to evaluate their home buying options by getting a pre-approval now.

Meridian also provides one of the best repayment options on the market today.#160;#160; Meridians 20/20 repayment program allows Members to pay down up to 20 per cent of the original principal balance per year without penalty and can be done at any time of the year without notice.#160; Members can also increase their monthly payment up to 20 per cent of your original payment plan each year.

*Rate is subject to change without notice and offers may be withdrawn or extended without notice. Refer to our website for current residential mortgage posted rates. Mortgage must fund by April 30, 2016.

About Meridian
With over 70 years of banking history, Meridian is Ontarios largest credit union, helping to grow the lives of more than a quarter of a million Members, including over 19,000 business Members. Meridian has $11 billion in assets under management and delivers a full range of financial services online, by phone, by mobile and through a network of 74 branches and 7 business centres. Meridian Members also have access to THE EXCHANGE#174; Network, with more than 2,500 no-fee ABMs across Canada and 360,000 ABMs in the United States. For more information, please visit meridiancu.ca.

SOURCE Meridian Credit Union

For further information: Diane Medeiros, Manager, Media and Stakeholder Relations, Office: (416) 597-4444 ext. 2667, Email: diane.medeiros@meridiancu.ca

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New online student loan resource center in Ohio

COLUMBUS, Ohio — There is a new resource for prospective, current and former college students in Ohio to help pay for their education.

Ohio Attorney General Mike Dewine announced Thursday that his office has developed a comprehensive online Student loan center.

The goal is to help students understand and manage student loans. 

For many Ohioans, getting an education requires taking out loans, Attorney General DeWine said. Student loans can help Ohioans get the education they need to reach their full potential, but far too often students leave school with substantial amounts of debt. The Attorney Generals Student Loan Center provides resources and tools to help consumers make smart borrowing decisions.

According to the Federal Reserve, Americans owe more than $1.3 trillion in outstanding student loan debt, growing at a rate of more than $2,700 a second.

The Attorney Generals Student Loan Center provides information and resources to explore careers, choose a school, apply for student loans, and repay loans.

It also provides tips on how to reduce the cost of attending college and two calculators to help students budget their expenses and plan their loan repayment.

Click here for more information.

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AG introduces online Student Loan Resource Center

Ohio Attorney General Mike DeWine announced the Ohio Attorney General’s Office has developed a comprehensive online Student Loan Center to help prospective, current, and former college students understand and manage student loans.

The Attorney General’s Student Loan Center, available at www.OhioAttorneyGeneral.gov/StudentLoans, contains information and resources to explore careers, choose a school, apply for student loans, and repay loans.

“For many Ohioans, getting an education requires taking out loans,” Attorney General DeWine said. “Student loans can help Ohioans get the education they need to reach their full potential, but far too often students leave school with substantial amounts of debt. The Attorney General’s Student Loan Center provides resources and tools to help consumers make smart borrowing decisions.”

According to the Federal Reserve, Americans owe more than $1.3 trillion in outstanding student loan debt, growing at a rate of more than $2,700 a second. Ohioans are not immune from this national trend, graduating with an average of $29,090 in student loan debt.

For most students, taking out student loans or applying for scholarships begins with filing the Free Application for Federal Student Aid (FAFSA), available in January each year.

The Attorney General’s Student Loan Center provides tips on how to reduce the cost of attending college. The site also offers two calculators to help students budget their expenses and plan their loan repayment.

For more information, students should visit the Attorney General’s Student Loan Center at www.OhioAttorneyGeneral.gov/StudentLoans.

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Gov’t cancels bond issue on grim outlook

The government’s attempt to reduce its deep involvement in the domestic bond market to the advantage of private sector players suffered a setback due to grim investor interest.

The Ministry of Finance last week cancelled efforts to issue a GH¢500 million (US$127 million) five-year bond in the domestic market this month due to what the ministry described as “recent market developments.

Though the government did not give details of reasons behind the postponement, analysts say uncertainties over the countrys economic outlook has rendered its long-term domestic debt unattractive to investors.

Proceeds from the bond were to be used to restructure the growing government debt, which is mostly from short-term domestic money market instruments.

The government, as part of its debt management strategy, is piloting a new method of issuing debt instruments dubbed: “the book-building approach,” which looks at medium to long-term instruments only.

The Finance Ministry had selected Barclays Bank, Stanbic Bank and Strategic African Securities (SAS) as joint Book Runners.

A senior economic analyst at Databank, Mr Courage Kingsley Martey, said in an interview with the Graphic Business that the government faced an uphill task in its debt management strategy to restructure its debt portfolio by converting short-term obligations into longer-dated instruments.

“Government would have to reduce its appetite for short-term borrowing in order to discourage investor preference for short-term fixed income securities,” Mr Martey said.

Yields on government debt have been on the rise for the last three years. The rate for the Bank of Ghanas benchmark 91-day bill rose to 25.33 per cent on September 4 from 25.21 per cent a week earlier.

This shows that despite the ongoing fiscal consolidation, investor sentiments remain quite fragile and would require structural improvements in the economy before they can be fully convinced to re-engage with the country.

It was going to be difficult for the book-builders to convince risk-averse investors to participate in a five-year cedi bond at this time when they are not certain of the immediate future path of the economy, an Accra-based fund manager said.

This is the third in a little over a year that the government has cancelled planned issuance of some domestic bonds. Earlier this year, the government cancelled a seven-year domestic bond planned for April this year. Last year it called off advertised five-year auctions to avoid exorbitant yields on the debt.

The government is currently under a three-year aid programme with the International Monetary Fund to stabilise the economy, dogged by stubborn deficits, high public debt and quickening inflation.

Ghana’s total debt is hovering around GH¢92 billion and economists have expressed worry about the level of borrowing, suggesting the debt levels are unsustainable.

But the government has insisted it is doing what it calls smart borrowing and has maintained that it is spending any loans acquired on projects that can refinance the loans.

In August when the bond was launched, Finance Minister Mr Seth Terkper pleaded with financial institutions to balance their portfolios by investing in the new medium to long-term bonds of government.

“Government securities are still safe – indeed, one of the safest in the country – and so we will urge the banks and financial institutions to look critically into it and balance their investments and not put everything in the short end of investments or look at only high profits in the short only,” he urged.

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Economic woes: Govt cancels 5-year domestic bond issue

The government’s attempt to reduce its deep involvement in the domestic bond market to the advantage of private sector players suffered a setback due to grim investor interest.

 The Ministry of Finance last week cancelled efforts to issue a GH¢500 million (US$127 million) five-year bond in the domestic market this month due to what the ministry described as “recent market developments.

Though the government did not give details of reasons behind the postponement, analysts say uncertainties over the countrys economic outlook has rendered its long-term domestic debt unattractive to investors.

Proceeds from the bond were to be used to restructure the growing government debt, which is mostly from short-term domestic money market instruments.

The government, as part of its debt management strategy, is piloting a new method of issuing debt instruments dubbed: “the book-building approach,” which looks at medium to long-term instruments only.

The Finance Ministry had selected Barclays Bank, Stanbic Bank and Strategic African Securities (SAS) as joint Book Runners. 

Market uncertainties

A senior economic analyst at Databank, Mr Courage Kingsley Martey, said in an interview with the Graphic Business that the government faced an uphill task in its debt management strategy to restructure its debt portfolio by converting short-term obligations into longer-dated instruments.

“Government would have to reduce its appetite for short-term borrowing in order to discourage investor preference for short-term fixed income securities,” Mr Martey said. 

Rising yields

Yields on government debt have been on the rise for the last three years. The rate for the Bank of Ghanas benchmark 91-day bill rose to 25.33 per cent on September 4 from 25.21 per cent a week earlier.

This shows that despite the ongoing fiscal consolidation, investor sentiments remain quite fragile and would require structural improvements in the economy before they can be fully convinced to re-engage with the country.

It was going to be difficult for the book-builders to convince risk-averse investors to participate in a five-year cedi bond at this time when they are not certain of the immediate future path of the economy, an Accra-based fund manager said.

 This is the third in a little over a year that the government has cancelled planned issuance of some domestic bonds. Earlier this year, the government cancelled a seven-year domestic bond planned for April this year. Last year it called off advertised five-year auctions to avoid exorbitant yields on the debt.

The government is currently under a three-year aid programme with the International Monetary Fund to stabilise the economy, dogged by stubborn deficits, high public debt and quickening inflation.

Ghana’s total debt is hovering around GH¢92 billion and economists have expressed worry about the level of borrowing, suggesting the debt levels are unsustainable.

But the government has insisted it is doing what it calls smart borrowing and has maintained that it is spending any loans acquired on projects that can refinance the loans.

In August when the bond was launched, Finance Minister Mr Seth Terkper pleaded with financial institutions to balance their portfolios by investing in the new medium to long-term bonds of government.

“Government securities are still safe – indeed, one of the safest in the country – and so we will urge the banks and financial institutions to look critically into it and balance their investments and not put everything in the short end of investments or look at only high profits in the short only,” he urged.

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IMF approves more borrowing as debts escalates

In spite of an escalating public debt profile, Ghana has been given the green light by the International Monetary Fund (IMF) to contract more loans to finance development projects.

The Business Finder can confirm that government’s request to the Fund for an increase in the ceiling on non-concessional borrowing has been granted.

“To reduce the pressure on the domestic securities market, the IMF Board has approved an increase in the debt limit for non-concessional external borrowing for Ghana to allow for a new Eurobond, as well as to finance critical development projects,” an IMF spokesperson told this paper through email.

He, however, indicated that for countries at a high risk of debt distress like Ghana, reducing the debt burden and associated vulnerabilities remained a priority for the Fund.

Ghana’s total debt stock has increased by GH¢5 billion more, between May and June 2015 and according to figures from the Bank of Ghana (BoG), the country’s total debt stock now stands at GH¢94.5 billion, representing 70.9 percent of Gross Domestic Product (GDP).

Ghana’s total public debt in the first half of the year has increased consistently by about GH¢15.1 billion, growing from GH¢79.4 billion in January, to GH¢94.5 billion in June.

Meanwhile, government has sought to assure that the rate at which it is borrowing, will not harm the country, and that, it is engaging in what it described as “smart borrowing.”

It will be recalled that the IMF report after reviewing Ghana’s performance under the Extended Credit Facility programme said, Ghana’s total public debt now exceeds pre-HIPC levels.

Again, the Fund is projecting that Ghana will end the year 2015 with a 75 percent debt-to-GDP ratio.

The source explained that Fund policies could accommodate some non-concessional borrowing if it was intended to finance critical and profitable projects for which concessional financing was not available, or if non-concessional borrowing was aimed at improving the country’s debt profile, “say by paying off expensive short-term debt and by lengthening debt maturities.”

“This was precisely the rationale for the IMF Board decision to increase the limit on non-concessional borrowing under the programme this year,” he added.

The Fund reckons that although the government’s ambitious and front-loaded fiscal consolidation plans are on track, Ghana still faces exceptionally high gross financing needs.

Due to tighter conditions on the domestic securities market, the government’s financing mix for the remainder of 2015 is projected to be more externally oriented.

The Bretton Woods Institution notes that the most important check on a rising debt is the fiscal deficit, as it is the determining factor of debt accumulation.

“The authorities’ Extended Credit Facility (ECF)-supported programme is aiming at an ambitious, but achievable, frontloaded fiscal consolidation to bring public debt back to a sustainable path over the medium term,” the spokesperson stated.

To achieve this, the programme aims at specific fiscal targets which will be monitored regularly in the context of the forthcoming reviews of programme implementation.

Though they agree that government must mobilize resources to meet its development objectives, some economists who spoke to the Business Finder raised concerns over the escalating debt level, doubting government’s commitment to the successful implementation of its debt management strategy.

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