According to Ghana News (December 19, 2011) report, NDC government has been approved for a non-concessionary loan of $3 billion from the China Development Bank (CDB) contrary to the wishes of the opposition party.
The NPP had argued that Ghana was under a conditionality of limiting non-concessionary loans to $800 million and therefore opposed the decision to take the loan. However during an IMF staff mission to Ghana in October 2011, the NDC government requested its Executive Board to modify the initial conditionality of limiting non-confessional borrowing by Ghana from the hitherto limit of US$800 million to US$3.4 billion.
It must be recalled that in September 2010, during his official visit to China, President Mills finalized a $3billion loan deal (subject to IMF’s approval, though) at bilateral talks between Ghana and China at the Chinese capital, Beijing. In addition to the $3billion which is under the first phase of a Comprehensive Project Finance facility, China has also agreed to advance a $260-million preferential buyers’ credit to finance the expansion of the Kpong Water Plant. Thanks to President Mills’ negotiating skills, Ghana has also secured a grant of 100 million Yuan to undertake water projects in parts of Ghana, in addition to a $150million facility to enhance Ghana’s E-governance programme.
On Wednesday, December 14, 2011, the Executive Board of the IMF unanimously endorsed a limit of US$3.4 billion on non-concessional borrowing for Ghana. According to the report, IMF’s decision was part of the board’s completion of the fifth review of Ghana’s economic and financial programme under the Extended Credit Facility (ECF) arrangement. The implication of that decision is that Ghana can source for non-concessional loans up to a limit of US$3.4 billion. This is unprecedented in the history of IMF’s programmes with Ghana. According to Mr. Seth Tekpeh, the Deputy Minister of Finance, the first part of the US$3 billion US$3 loan facility from the China Development Bank should be available before the end of 2011. What will happen when NDC secures the loan? All things being equal, this money will be issued before the 2012 elections and hence enhancing President Mills’ re-election chances. Let us pray that NDC will not use the loan to buy votes for the 2012 elections.
Indeed how is this loan going to be monitored to ensure that it is going to be used for just what the NDC GOVERNMENT has outlined? What is the guaranteed that the politicians are not going to sash the bulk of the loan in their foreign bank accounts? Will President Mills be able to police the flow of the funds? What are the contingent plans in case NDC loses the 2012 elections, -- although it is unlikely for any incumbent African government to have this kind of money and lose elections?
The Minister of Finance, Dr Duffuor has already assured Parliament how the Government intends to disburse the loan. According to Dr Duffuor, “...The US$3.0 billion loan facility from China Development Bank (CDB) would be used to reduce the infrastructural deficit of the country by undertaking a number of infrastructure projects in the oil and gas, road, rail, health, education, water and other sectors, consistent with the GSGDA priorities.”
According to Dr Duffuor, “Specific projects identified to be funded by the CDB loan include: Accra Metropolitan Area Intelligent Traffic Management Project; Accra Plains Irrigation Project; Coastal Fishing Harbours and Landing Sites Project; Eastern Corridor Multi-Modal Transportation Project; Western Corridor Gas Infrastructure Project (Helicopter Surveillance Fleet for Western Corridor “Oil Enclave”); Western Corridor Petroleum Terminal Project; Western Corridor Infrastructure Renewal Project (Western Railway Line Modernization and Takoradi Port Rehabilitation/Retrofit); Sekondi Free Zone Project; Development of ICT, Enhanced Surveillance Platform for Western Corridor “Oil Enclave”; and SME Projects Incubation Facility.”
The NDC government has stated that “these projects have the potential to significantly transform Ghana’s economy. Will this money/loan in deed translate into these massive infrastructural developments as promised by Mills-led government? Let us pray so.
The Minister of Finance has assured Parliament that with this loan,
1. The Accra Plains Irrigation Project will irrigate 5,000 hectares in a priority area for a mixed cultivation regime targeting approximately 60 per cent of irrigated area for agribusiness; 20 per cent for large scale farmers; and 20 per cent for small scale farmers.
2. Developing the multi-modal transportation infrastructure will enhance the cost-effectiveness of freight handling corridors linking the Tema Port via the Volta River to (a) the Savannah Accelerated Development Zone, and (b) land-locked countries (Burkina Faso, Niger, and Mali). [Hopefully this means that the long-awaited super highway to link the south to the north, beginning with the Accra-Kumasi road will resume or begin in January 2012. This should be a litmus test of the sincerity of the government].
3. It would facilitate access to the Afram Plains, Accra Plains and areas of the Volta region that have great potential for developing agro-industrial and fishery ventures,”
Interestingly, this is what one Ghanaian had to say on Ghanaweb when the news was unveiled: “It was three billion dollars loan, now it is $3.4 billion making the NDC to have 400 million dollars to doll to themselves at the expense of the Ghanaian citizens who will have to pay the loan in fifteen years.” It sounds silly but it must raise some concern for all Ghanaians to hold their leadership accountable. $3.4 billion is more than enough to transform the country far and above what any government could do since independence, irrespective of inflation. My only concern here is, in truth, it looks like the government has not really planned for this money. The list given by the Finance Minister is too broad to be taken serious.
Although his speech sounds good Ghanaians should not take it at face value. Ghanaians should demand a detailed business plan for each project form beginning to end. I’m afraid not until Parliament is strong enough to provide serious oversight, Ghanaians will wake up in 2016 to find very little from their borrowed money. It is pertinent that Ghanaians demand to know how this $3.4 billion will be paid back in 15 years. When will the investments begin to yield profit; and how much per year is going to be generated? What kind of jobs will this bring Ghanaians? It is the moral duty of Ghana Parliament to scrutinize all what the loan is intended to do. Anything less will not make Ghana better off tomorrow.
A close watch however will see President Mills go down in history as another great African leader after Kwame Nkrumah. President Mills MUST live up to his reputation. When monitored and held responsible by the people, President Mills' achievements could be written on stone as well as NDC’s. In fact, with this kind of money President Mills must live up to Ghana’s expectations and deliver his Better Agenda for Ghana. NDC should be able to create more jobs, transform the Nation, and improve living conditions for the ordinary Ghanaian within the next decade. But it all begins today.
Source: Okyere Bonna
|Disclaimer: Opinions expressed here are those of the writers and do not reflect those of Peacefmonline.com. Peacefmonline.com accepts no responsibility legal or otherwise for their accuracy of content. Please report any inappropriate content to us, and we will evaluate it as a matter of priority.|