The leadership of the Nana Addo-Dankwa Akufo-Addo-led New Patriotic Party (NPP) and their followers have been gravely disappointed about the wise decision by the International Monetary Fund (IMF) not to try to impede Ghana and the Mills-led National Democratic Congress (NDC) government in the ongoing process of securing a Three Billion Dollar Chinese Loan deal for the speedy development of the country.
The NPP had hoped and prayed for the IMF to kick against the almost concluded deal for a non-concessionary loan of $3 billion from the China Development Bank (CDB) by the NDC government. God in his infinite wisdom refused to grant the party’s awful wish, and the IMF last week gave the government its blessing to go ahead and secure the loan.
The NPP claimed to have premised its opposition to the loan on the fact that Ghana was under a conditionality of limiting non-concessionary loans to $800 million.
But during an IMF staff mission to Ghana in October 2011, the government requested its Executive Board to modify the initial conditionality of limiting non-concessional borrowing by Ghana from the hitherto limit of US$800 million to US$3.4 billion.
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. That 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, which is unprecedented in the history of the fund’s programmes with Ghana and with several other countries.
The Catalyst is aware that the government was certain on its decision to secure the loan against any opposition from any quarters including the IMF. The NPP had expected the IMF to kick against the loan so there would be a rift between the Ghana government and the IMF. Up until the IMF decision, which has effectively silenced the NPP, leading members of the party had created doubts about the government’s ability to secure the loan and also threatened to go to court and seek to block the money from coming.
The minority spokesperson on finance, Dr Akoto Osei, threatened to sue the government in order to stop it from pursuing the loan. In the thinking of the NPP, the loan was not in the best interest of the country.
Speaking on Joy FM’s News File on Saturday 19th November 2011, Mr. Asamoah, a member of the communications team of the NPP, insisted that there was no way Ghana could source the Chinese loan since the International Monetary Fund (IMF) was not in going to give its blessing to it.
The NPP leading member was emphatic that the loan would never reach the shores of Ghana next year contrary to promises by the Mills-led government that the money will come for massive infrastructural development.“The finance minister can’t sign that loan because he needs the consent of the IMF which he hasn’t got,” he said.
Minister of Finance, Dr Duffuor told Parliament not too long ago how government intends disbursing the loan. According to him “...The US$3.0 billion loan facility from China Development Bank (CDB) would be utilised 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.”
He added: “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.
“Madam Speaker, these projects have the potential to significantly transform Ghana’s economy. For example, 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. 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). It would also 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,” the Finance minister said.
Deputy Minister of Finance, Mr Seth Tekpeh has disclosed that the first tranche of the three billion dollar loan facility from the China Development Bank should be available before the end of the year.
President Mills, as part of his official, visit to China in September 2010 clinched the $3billion deal at bilateral talks between him and his Chinese counterpart, in the Chinese capital, Beijing.
In addition to the three billion dollars which is under the first phase of a Comprehensive Project Finance facility, China has agreed advancing a 260-million dollar preferential buyers credit to finance the expansion of the Kpong Water Plant, while a grant of 100 million Yuan will also be provided to undertake water projects in parts of the country, in addition to a 150million dollar facility to enhance Ghana’s e-governance programme.
The IMF’s endorsement of the Mills-led government’s decision to secure the loan thus leaves the NPP stuck in their own mud.