Economy

US$750m loans will impact economy positively – John Kumah

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By Eugene Davis

A Deputy Minister of Finance, John Kumah, has stated that the outstanding loans close to US$750 million which has been approved by parliament will stabilize the troubled economy.

According to Mr. Kumah, the loans will help the economy in terms of government priorities and commitments, adding that reforms are necessary to achieve efficiency in the country’s financial administration.

 “They are positive loans that will impact the economy” he told the parliamentary press corps on Tuesday when parliament reconvened from their break to give green light to the loans.

Parliament on Tuesday approved seven loan agreements totaling $750 million to enhance public sector reforms, food security, COVID-19 response measures and digital acceleration agenda.

The facilities which were approved during an emergency sitting today were an on-lending agreement between the government of Ghana (GoG) and the International Development Association (IDA) of the World Bank Group for an amount of $150 million to finance the West Africa Food System Resilience Programme phase two under the Multipurpose Programme Approach.

The others were a €170 million between the GoG and the Development Bank of Ghana for the establishment of the Development Bank of Ghana, a $60.6 million agreement between the GoG and the IDA of the World Bank Group as a third additional financing for the Ghana COVID-19 emergency preparedness.

The rest were a $30 million response project and an agreement between the GoG and the Government of the Republic of Korea (acting through the Export-Import Bank of Korea-Government Agency for the Economic Development Cooperation Fund (EDCF), an agreement between the GoG and the IDA of the World Bank for an amount of $150 million to finance the Primary Healthcare investment Project and a $150 million agreement between the GoG and the IDA to finance the Public Financial Management for service delivery project.

The House also okayed a financing agreement between the GoG and the IDA for an amount of $200 million to finance the Ghana Digital Acceleration Project.

The loan agreements, which had been on the books already, were supposed to have been approved by the House before it adjourned sine die on March 31, 2023.

Dr.Kumah  also stated that the recall of parliament was to complete an “important assignment of loans that has been contracted previously but we have not been able to ratify in parliament. The facilities that were approved today are not new loans, they are already on our books and require parliamentary approval but we were unable to do before we rose the last time.

He explained, government had to reallocate some funds -US$750m from Afreximbank that was approved last year “we needed to reallocate some of the funds to some more priortity projects of government, so these are not new loans, these are some of the reallocation we did and to approve the already made available funds ..which parliament had not been able to approve.

“These are loans we have already taken on our books, so parliament just approved the on-lending agreement between government of Ghana and DBG, so we just want to put on record that government is not taking any facility, these are loans we have already contracted on our books and require parliamentary approval.”

Contributing to the debate, the Minority Leader, Dr Cassiel Ato Forson, said given enormous impact of loans on the country, he did not think it was time the government should take additional loans.

He said Ghana was currently insolvent and defaulted in the repayment of its external and domestic debts.

For instance, he cited how just last week, one of the rating agencies that Ghana government had contracted had downgraded Ghana to “restrictive default”.

“Mr Speaker, simply put we are in a deep hole and what I know is that when you are in a hole the first thing you do is to stop digging but unfortunately this government could not stop digging,” he said.

Sadly, he expressed worry that Parliament had been called to approve $750 million, an amount which he said would not go to where “we can drive productivity.”

Buttressing his argument, Dr Forson said with food security being very important, he said the Minority would support any loan that was geared towards food security in a way that farmers would benefit.

“But unfortunately, the $150 million meant for food resilience system in West Africa is money is not going to the farmer but largely this amount is staying in the offices and the time has come for us to review the loans that the World Bank grants.

“Often times, the World Bank grants loans to countries where it is heavily concentrated on consultancy and I have my big concern of this matter and I have expressed my concern to the World Bank themselves and I will expressed his here,” he said.

He, therefore, urged the House to reject the $150 million loan to send a signal to the World Bank to cause them to understand that “if they intend lending money to Ghana that money should be geared towards productivity and in something that we can be able to repay.”

Other bills that were approved includes; Excise Tax Stamp (Amendment)Bill 2022, Standard for Automatic Exchange of Financial Account Information (Amendment) Bill, 2023 -it seeks to strengthen due diligence procedures and prescribe circumvention practices. Amends Act 967 of the 2018 law.

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