"Government has come to the conclusion that it will be in the national interest not to pursue further discussions and negotiations in respect of the International Financial Consortium loan approved by Parliament on July 12, 2002".
Mr Yaw Osafo-Maafo, Minister of Finance said this on Tuesday when he presented a statement in Parliament on the loan of one billion dollars in three trenches of 350 million dollars from the IFC.
The Minister said it was relevant to state that no payment was made in advance in anticipation of the loan, and that the sovereign guarantee has neither been issued to the Consortium nor to any member of the Consortium by the government and that the honour of the country has not in any way been compromised.
Mr Osafo-Maafo said the implication of the decision was that the additional resources the Government sought to find to assist with quick improvement of infrastructural development is no more available to the country under the terms of the loan.
He said the government's priorities was prominently on infrastructural development and the pursuance of vigorous development agenda that would result in growth and significant poverty reduction, would need additional financial resources.
" Such monies would have to be over and above the financial resources, that are normally available to us through our traditional sources" and this was what informed the pursuit of the Consortium loan for the development of our infrastructure., he added.
Mr Osafo-Maafo said the concerns expressed by some of the Finance Committee included the "timing of the issuance of the Sovereign Guarantee", the role to be played by the "Trust" and the proposed joint Company and the "modalities for the payment of a transaction fee of 3,5 per cent and the transparency in procurement and contracts".
The Finance Minister said there has, however, been a systematic campaign against the loan under all kinds of pretexts involving statement, some completely false, some completely ignorant of the realities of international business, others deliberately vicious and others well meaning and constructive.
He said this campaign obviously sent signals to the development partners, who subsequently expressed unease about the loan during discussions with the government.
Mr Osafo-Maafo said Government has not received any information from any source, that provides evidence against the credibility of the consortium, the loan source or known members associated with the facility and yet the campaign against the loan has persisted.
He said the implication of the decision was that the additional resources the government sought to find to assist with quick improvement of the infrastructure was no more available to the country under the terms of the particular loan.
The Minister said the building of roads and ports, the communication network and provision of energy to fuel the modernisation process and thus alleviate the suffering of the people at a rapid rate has been the driving force towards the pursuit of the loan facility.
Mr Osafo-Maafo said what this means was that Government has to look inward and raise additional resources domestically to tackle these problems and also requests the donor groups, both multi-lateral and bi-lateral to consider finding additional resources to carry out the vigorous development of the infrastructure.
Full text of the Minister’s statement to Parliament:
Mr. Speaker,
You may recall that when I made a statement on the review of the Economic Performance on 12th November, 2002, I made it clear that I would come back to brief the House on the International Financial Consortium loan of US$350 million which was approved by this House on the 12th of July, 2002, giving the Minister of Finance the authority to process the offer to its logical conclusion.
In his State of the Nation address to Parliament at the beginning of this year, His Excellency the President set out clearly the Government’s priorities, prominent among which, was infrastructure development.
Mr. Speaker, in addition to the President’s stated priorities, it has been clear from the two budgets prepared by the NPP Government and all the Main and Mini Consultative Group (C.G) meetings held under the Kufuor Administration, that if we are to pursue a vigorous development agenda that will result in growth and significant poverty reduction, we would need additional financial resources. Such monies would have to be over and above the financial resources, which are normally available to us through our traditional sources.
This is what informed the pursuit of the Consortium loan for the development of our infrastructure.
The Consortium Loan and Parliament
The Consortium Loan Agreement was laid in Parliament on Friday 28th June 2002, after Cabinet approval and, as required, it was referred to the Finance Committee for consideration and report in accordance with Article 181 of the Constitution and Standing Order 171 (1) of the House.
The Minister of Finance and the Governor of the Bank of Ghana appeared before the Finance Committee to assist your committee to make the necessary decision on the loan offer.
The concerns expressed by some members of the Finance Committee included the timing of the issuance of the Sovereign Guarantee” the role to be played by the “Trust” and the proposed joint company and the modalities for the payment of a transaction fee of 3.5% and the transparency in procurement and contracts”.
Mr. Speaker, everybody in this country knows that there has been a systematic campaign against the loan under all kinds of pretexts involving statements, some completely false, some completely ignorant of the realities of international business, others deliberately vicious and others well meaning and constructive.
This campaign, no doubt, sent signals to our development partners, who subsequently expressed unease about the loan during discussions with the government.
At various meetings with our key development partners, Government requested them to bring to its attention, any information in their possession, which might adversely affect the credibility of the loan and its sources, using the superior investigative agencies at their disposal.
Mr. Speaker, as I speak, Government has not received any information from any source, local or external, which provides evidence against credibility of the consortium, the loan source, or known members associated with the facility, and yet, the campaign against the loan has persisted. Mr. Speaker, Government has nevertheless taken note of the negative campaign and also of obstacles that have arisen out of the implementation of the transaction.
The government has therefore come to the conclusion that it will be in the national interest NOT to pursue further discussions and negotiations in respect of the International Financial Consortium loan approved by Parliament on 12th of July, 2002.
Mr. Speaker, it is relevant to note the following:
- 1. That no payment has been made in advance in anticipation of the loan.
- 2. That the Sovereign Guarantee has NEITHER been issued to the Consortium NOR to any member of the Consortium by the Government; and
- 3. That the honour of the country has not in any way been compromised.
Mr. Speaker that the basic infrastructure of our economy is in bad shape cannot be disputed. The building of roads and ports, the communication network to open the country and the provision of energy to fuel the modernization process and thus alleviate the suffering of the people at a rapid rate than is possible under our current circumstances have been he driving force towards the pursuit of the loan facility.
What this means is that Government has to look inward and raise additional resources domestically to tackle all these problems that cannot wait. This will require extra effort on everybody’s part and I hope the whole House and all citizens will rise to the occasion.
Mr. Speaker, we shall also have to request our friends from the donor groups, both multilateral and bilateral to consider finding additional resources for us to carry out the vigorous development of our infrastructure. Government remains committed to intensifying its efforts in finding the resources required for the accelerated development of our dear country.
Mr. Speaker, I thank my colleagues for the suggestions made on the floor of Parliament, which have proved invaluable to the Government in the whole transaction. I hope that when I come back to seek support from Members of Parliament to raise additional resources to improve our infrastructure, I will receive their support.
That you, Mr. Speaker.
