DI wants $3bn ‘illegal’ CDB loan cancelled and cured

The Danquah Institute has described the $3 billion China Development Bank loan contracted by the Mills-Mahama led National Democratic Congress government as an illegality as it breaches sections of the Petroleum Revenue Management Act passed by parliament this year.

DI is therefore calling for the cancellation and subsequent curing of this loan facility and has urged the parties to the contract to take note of this and proceed to cure it or proceed to their own detriment.

The Executive Director of the Danquah Institute, Gabby Asare Otchere-Darko made this known at a press conference organised by the Institute and held at the Ghana International Press Centre on Wednesday 21st December 2011.

Gabby explained that the $3 billion Chinese loan is a commercial loan divided into two tranches of $1.5 billion each. However, the first tranche of the loan, referred to as Tranche A of the Master Facility Agreement, which uses petroleum proceeds as collateral has a repayment period of 15 years.

“Section 18 (7) of the Petroleum Revenue Management Act, 2011 (Act 815) states: ‘The Annual Budget Funding Amount may be used as collateral for debts and other liabilities of Government for a period of not more than ten years after the commencement of this Act’”, Gabby explained.

According to Gabby, since the MFA was considered and approved by Parliament as a whole, Government cannot pick and choose which aspect is legal and implement it when clearly a significant half of the approved facility conflicts with Act 815.

“Since Tranche A is part of Master Facility Agreement, the illegality stated above renders the whole agreement illegal”, Gabby said.

Gabby urged President Mills to stop the illegality by cancelling the MFA and presenting a new one that does not breach the law on collateralisation as provided in Act 815.

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