MPs to approve over $4bn loans before recess

Analysis done by The Globe newspaper puts the total value of these new loan facilities at more than US$ 4 billion.

This would push the amount of loans approved by Ghana’s Parliament under President Mills at US$14 billion. Ghana's international debt stock was $4 billion when the NDC took office in January 2009, with another $4. 1 billion, representing domestic debt.

Ghana's development funding gap is estimated to be around $2 billion a year. While there is recognition that this gap must be filled, experts, including World Bank economists, have cautioned against ignoring the nation's capacity to utilize these mega loans timeously and efficiently.

It was recently disclosed at a public forum organised by Citi 97. 3 FM and the Danquah Institute that some $4 billion worth of soft loans available to Ghana has not been accessed because of bureaucracy and capacity weakness.

Closing the gap

The new loans, which -- according to Finance Ministry officials, fit into the Mills administration’s plan to close the widening national infrastructure gap -- have been listed for approval in spite of increasing opposition outcry over the thee-year-old government’s crave for “super loans that can destroy our economy. ”

Others have described it as "a mad rush" for loans, with its concomitant threat of insufficient value-for-money evaluation.

Although the new loan agreements have been advertised in the agenda for Parliament since October this year, for the third meeting of the 230-member legislature this year, some lawmakers have called for the brakes to be pulled for proper due diligence to be undertaken.

Similar anxieties were expressed over the $1. 5 billion STX agreement last year and the $3 billion Chinese loan 3 months ago.

The STX deal continues to stumble from one crisis to the other, one year after the deal was signed.

The $3 billion CDB loan is awaiting an opinion from the International Monetary Fund in December before the two parties will finally sign it. It breached the $800 million commercial loan ceiling which the Ghana government agreed with the IMF for 2011. Government is hoping for a waiver from the IMF to pave the way for the execution of this CDB facility.

On November 16 this year, Finance Minister Dr Kwabena Duffuor, told MPs in the government’s 2012 National Budget Statement that “. ..the total public debt increased from US$11.2 billion in September 2010 (representing 37.8 percent of GDP) to US$14.8 billion (representing 39.0 percent GDP) in September 2011.”

This did not include the $1.5 billion STX loan and the $3 billion CDB facility.

Top five loans

The top five of the 30 loans listed for approval in the coming weeks total about $2.5 billion. Biggest among them is a “loan agreement between the Government of the Republic of Ghana and the Industrial Commercial Bank of China for an amount of US$990,000,000.00 to finance the Modernisation of the Eastern Railway Project.”

Second is a “credit agreement between the Government of the Republic of Ghana and KBC Bank NV of Belgium for an amount of 518,000,000.00 Euros to finance the Takoradi Port Rehabilitation Project,” The Globe found.

The third costliest is $400 million credit facility with Estrategia Investmentos to be used to complete the “affordable Housing Project” started by the Kufuor administration.

It is recalled that Government in 2009 put the estimated completion cost of the nearly 5,000 affordable homes at less than $150 million.

Then, there is a “Credit agreement between the Government of Ghana and the African Development Bank for an amount of US$380,000,000.00 for the Takoradi Trauma and Efia Nkwanta Hospital Project”.

Also before Parliament is a supplementary loan agreement from the China Exim Bank for $168 million for the Bui Hydroelectric Power Project.

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