The decision by the Government in March 2001 to take advantage of the enhanced HIPC initiative has started bearing fruits. As a result of budgetary savings from debt service payments, it has now been made possible to release the first tranche of funds for use in the health and educational sectors.
Accordingly, in August this year, the government released an amount of 117 billion cedis HIPC funds into the economy for development projects throughout the country.
The breakdown is as follows:-
Metropolitan Areas – 8.0 billion cedis
(i) Accra - 3.5 billion cedis
(ii) Kumasi - 2.5 billion cedis
(iii) Sekondi/ Takoradi - 2 billion cedisMunicipalities - 6.0 billion cedis
(i) Tema - 1.5 bilion cedis
(ii) New Juaben (Koforidua) - 1.5 billion cedis
(iii) Tamale - 1.5 billion cedis
(iv) Cape Coast - 1.5 billion cedisOther district assemblies - 1.6 billion cedis each.
Sector Ministries
Three (3) Ministries which have so far met both the programme and tracking requirements have also received the first tranche of 8.0 billion cedis.
MODALITIES FOR THE RELEASE OF FUNDS
Projects eligible for funding for this first tranche are infrastructure for Basic Education, Health Facilities (Primary Health Care), Community Water and Sanitation.
Metropolitan, Municipal and District Chief Executives are to submit a prioritised list of proposed projects to benefit from the 1st tranche of 50% of the approved allocation through their respective Regional Ministers.
The balance of 50% will be released upon satisfactory progress on the implementation of first tranche projects.
Regional Ministers are also to liaise with the Minister for Local Government and Rural Development who has overall responsibility for the implementation of these district programmes at the national level.
HIGHLIGHTS OF BENEFITS
In the year 2001, when the eligibility of Ghana to apply for interim HIPC relief was confirmed, Ghana was able to suspend debt service payments which brought budgetary savings of about $190 million dollars or the equivalent of 1.37 trillion cedis for fiscal year 2001.
In December 2001, Paris Club creditors agreed in Paris to provide further relief of $90 million (equivalent to 702 billion cedis) when Ghana reached the Decision Point.
In February 2002, on the basis of Ghana economic performance for 2001, the Boards of Directors of the IMF and World Bank confirmed that Ghana had reached the Decision Point and therefore was eligible for further relief under the Enhanced HIPC initiative.
In May 2002, the Government successfully negotiated with our Paris Club Creditors to receive debt relief on a more favourable basis (Cologne Terms) as opposed to the traditional Naples Terms.
The Government expects to “receive” a total amount of 253 million dollars or approximately 1.973 trillion cedis in debt relief for the year 2002. An amount of US$96 million (or approximately 749 billion cedis) will be lodged in the HIPC main account at the Bank of Ghana.
