Wednesday, July 23, 2014

Ghana's External Debt Now $12 Billion
Republic of Ghana President John Mahama.
Ghana’s borrowing streak, which has become a subject of debate in recent days, continues unabated. Parliament was last Friday compelled to approve various loan agreements sourced from its development partners by the government, totaling US$495,788,879.

However, the approval did not escape criticism from the Minority, which demanded value for money in such agreements. Among the projects are Phase 1 of the Kumasi Central Market Redevelopment and the acquisition of buses and spare parts for the two state-run transport firms (Metro Mass Transit Limited and Intercity STC).

Out of the above-mentioned amount, US$40,030,463, sourced from Liaoning Huanghai Automobile IM/EXP Company Limited, is meant to finance the acquisition of 200 Huanghai Complete Built-Up (CBU) Mass Rapid Transit (MRT) City Buses for use by Metro Mass Transit Limited.

A further US$93,433,416, loaned from the HSBC Bank under the EKN Supported Export Credit Facility, is meant to partly finance the acquisition of 295 Scania buses and spare parts for the Bus Rapid Transit System and Intercity STC Coaches Limited.

An additional US$17,300,000, sourced from same HSBC Bank under the EKN Supported Export Credit Facility, would be used to part finance the acquisition of 295 Scania buses, spare parts and related infrastructure for the Accra Bus Rapid Transit System and Intercity STC Coaches Limited.

That notwithstanding, an amount of US$345,025,000 loaned from the Deutsche Bank and its affiliates and other financial institutions, of which part of it (US$135,512,500) was obtained under the SAIN Covered Export Credit Facility, is meant to finance the Kumasi Central Market Re-development Project (Phase 1).

The current loan adds up to the country’s overburdened external debt, which stood at US$11,461.71 million as at end December 31, 2013. Some Members of Parliament, who were not enthused with the short period with which loan agreements were brought to the House for consideration and approval, said it inhibits in-depth scrutiny, thereby impacting negatively on value-for-money for the country.

“It does not enable us to thoroughly and diligently consider it, even in committees, with the best of intentions,” noted the New Patriotic Party (NPP) MP for Sekondi, Papa Owusu Ankomah. He added: “Please, let us give ourselves the opportunity to be able to meaningfully exhaust all the agreements, so that, at the end of the day, when we come out with our report, and we debate them, we can say to ourselves that we have dealt very well with the referrals brought before this House.”

The strategy for the late submission of loan agreements for Parliamentary approval, presumably to avoid critical analysis, mainly from the opposition, has often been adopted by successive governments for fear that it might be shot down when submitted early.

Such agreements are normally brought to the plenary for consideration during the last day sitting of a particular session, where members are busily considering other business of the House, thereby, to a greater extent, escaping the eagle eyes of some members, mainly from the opposition.

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