Business News of Wed, 12 Sep 20185
$2bn bauxite deal: Agreements before parliament not a loan – IMANI
Policy think tank IMANI Africa, has stated that the agreements in relation to the $2 billion deal between the Government of Ghana and China’s Sinohydro Group Limited, does not constitute a loan agreement.
“None of the agreements currently before parliament constitutes a loan agreement,” IMANI Africa stated in a release on Tuesday, 11 September 2018 on the assessment of the deal and how government should proceed.
The Minority in Parliament has argued that the arrangement is a loan and not barter as touted by government.
Ranking Member of Parliament’s Finance Committee, Cassiel Ato Forson suggested that the Akufo-Addo government is clearly attempting to hide the $2 billion bauxite-for-infrastructure deal, from the debt log.
The Minority has petitioned the International Monetary Fund (IMF) to provide clarity on the deal whether it should be added to Ghana’s debt stock or otherwise.
A letter from Natalia Koliadina, IMF Resident Representative in Ghana, in response to the Minority’s petition over the deal, seeking clarification from the Bretton Wood institution said the matter has been forwarded to the IMF’s Washington D.C. Headquarters for determination during the upcoming review mission under the Extended Credit Facility.
Per the agreement, Ghana will exchange refined bauxite with $2 billion worth of infrastructure from the Chinese firm.
In the released document on the assessment of the deal, IMANI said: “The appeal to the IMF by the minority in Parliament, whilst understandable given the importance for clarity, may well turn out to justify our position. Unless as we explain that given the complexity of the deal, the government may have unknown to the country actually entered a loan agreement to actualise the deal. That would be shocking”.
IMANI also indicated that: “What is also true from an assessment of the ‘term sheet’ is that the Government of Ghana and Sinohydro do intend to enter into a loan agreement. To the extent that Sinohydro hasn’t yet committed to the actual financing in the MPSA, the agreement before parliament cannot be construed as a loan agreement. However, Ghana must enter a loan agreement to keep this deal alive”.
IMANI further pointed out that government has no contingency plan to finance its obligations in case the timelines for a refinery plant to process bauxite is not operationalised as expected.
IMANI is of the view that: “Without rigorous attention to every detail, Ghanaian leaders risk bungling these projects (as happened in the past and is happening in other African countries) and Ghanaian citizens would be left carrying the can”.
The think tank believes the arrangement has the potential of leaving the country with partly completed projects or judgement debts.
“We may wake up at some point to discover that unless we are willing to tolerate partially abandoned projects or judgment debts, we must activate the advanced payment clause in the master project support agreement (MPSA) for “early work” and thus commit to pay substantial sums to properly prosecute any part of our responsibilities under the foregoing agreement.”