Parliament Approves Controversial IFC Loan

In spite of criticisms from the minority National Democratic Congress (NDC), Ghana’s Parliament in its last day of sitting Friday, approved the controversial International Financial Consortium loan agreement.

Before its passage, the country’s Finance Minister Yaw Osafo-Maafo (MP) vehemently defended the loan agreement saying, it is important and dear to the country, especially during the period when the country needs financial support for development.

He said the loan agreement between the government and IFC, which was in a series totalling one billion dollars to be disbursed in three batches over a period of three years for infrastructure development, was well intended.

Mr. Osafo-Maafo said this in his submissions at the moving of a motion and resolution on the report of the Finance Committee on the loan agreement between the government and the IFC for an amount of 350 million dollars for infrastructure and other development projects.

The Resolution for the Motion was adopted by 102 votes defeating the Minority's 83 votes after a voice decision was objected to by the minority who requested for a head count.

The loan agreement was laid before the House on June 28, 2000 and referred to the committee for consideration.

In fulfilment of the President's undertaking to seek marked improvement in the level of infrastructure services, the Ghanaian government sought to seek additional financial resources from the private capital market to supplement the tax revenues.

According to the Vice-Chairman of the Finance Committee of the 200-member parliament, Benjamin Osei Kufuor, the loan is the main batch of 350 million dollars whose main objective was to finance infrastructure projects leading to the provision and improvement of basic amenities in both urban and rural areas.

He said the proposed sectoral allocations of the loan were for Energy and infrastructure projects, roads, urban and rural water, drainage and sanitation, village infrastructure and for contingencies and communications.

The Committee observed that the Loan agreement had a concessionary element of 41.65 per cent and therefore found to be acceptable as compared to the benchmark of 35, agreed between Ghana and the IMF.

Mr. Kufuor said the government representatives explained that this was a move away from project financing to programme financing of government's development budget such as the 220 million dollar facility granted by the World Bank for the roads sector.

The Minority side in its submissions, however, disagreed and questioned the source of the loans since according to them the whole process was shrouded in secrecy and the consortium was not noted for any credibility.

Minority Chief Whip, Doe Adjahoe, said according to the Standing Orders of the House, the only document to be discussed should be the one laid before the Finance Committee. However, members had been presented with thee different reports instead of the main report, which raised a lot of question marks.

Mr. Osafo-Maafo retorted that since the Committee was not a rubber stamp one, it had to make some changes to the various documents to arrive at a suitable agreement, which had no significant effect on the main document.

Minority Spokesman on Finance Moses Asaga, commended the committee for their devoted work, but said the final document and the IFC as a corporate body lacks the credibility describing it as an engineering firm dealing with high pressure and cleaning systems in the United States.

He said the proposed projects were not specific and definite, while feasibility studies had not been taken to start them and cautioned that the World Bank and IMF could make things go sour for Ghana if they were not informed about the transaction.

Mr. Asaga also former deputy finance minister said under the HIPC initiative, there is a debt sustainability accessibility concession to which Ghana could benefit and if the country fails to notify them 'we tend to loose such benefits adding that we must get a more solid and responsible consortium to assess loans from.

Senior Minister and Member of Parliament for Sunyani East, J.H. Mensah, explained the context under which the loan was processed adding that the country had a major problem of infrastructure development and needed such financial support to implement the projects.

He gave the assurance that there would not be any form of discrimination in the implementation of the projects even to areas where members had shown open objection and rejection of the loan agreement.

Dr Kwabena Adjei, NDC-Biakoye opposed the loan agreement because the source was not known and explained that in capital financing one should be abreast with the people one was dealing with.

In spite of criticisms from the minority National Democratic Congress (NDC), Ghana’s Parliament in its last day of sitting Friday, approved the controversial International Financial Consortium loan agreement.

Before its passage, the country’s Finance Minister Yaw Osafo-Maafo (MP) vehemently defended the loan agreement saying, it is important and dear to the country, especially during the period when the country needs financial support for development.

He said the loan agreement between the government and IFC, which was in a series totalling one billion dollars to be disbursed in three batches over a period of three years for infrastructure development, was well intended.

Mr. Osafo-Maafo said this in his submissions at the moving of a motion and resolution on the report of the Finance Committee on the loan agreement between the government and the IFC for an amount of 350 million dollars for infrastructure and other development projects.

The Resolution for the Motion was adopted by 102 votes defeating the Minority's 83 votes after a voice decision was objected to by the minority who requested for a head count.

The loan agreement was laid before the House on June 28, 2000 and referred to the committee for consideration.

In fulfilment of the President's undertaking to seek marked improvement in the level of infrastructure services, the Ghanaian government sought to seek additional financial resources from the private capital market to supplement the tax revenues.

According to the Vice-Chairman of the Finance Committee of the 200-member parliament, Benjamin Osei Kufuor, the loan is the main batch of 350 million dollars whose main objective was to finance infrastructure projects leading to the provision and improvement of basic amenities in both urban and rural areas.

He said the proposed sectoral allocations of the loan were for Energy and infrastructure projects, roads, urban and rural water, drainage and sanitation, village infrastructure and for contingencies and communications.

The Committee observed that the Loan agreement had a concessionary element of 41.65 per cent and therefore found to be acceptable as compared to the benchmark of 35, agreed between Ghana and the IMF.

Mr. Kufuor said the government representatives explained that this was a move away from project financing to programme financing of government's development budget such as the 220 million dollar facility granted by the World Bank for the roads sector.

The Minority side in its submissions, however, disagreed and questioned the source of the loans since according to them the whole process was shrouded in secrecy and the consortium was not noted for any credibility.

Minority Chief Whip, Doe Adjahoe, said according to the Standing Orders of the House, the only document to be discussed should be the one laid before the Finance Committee. However, members had been presented with thee different reports instead of the main report, which raised a lot of question marks.

Mr. Osafo-Maafo retorted that since the Committee was not a rubber stamp one, it had to make some changes to the various documents to arrive at a suitable agreement, which had no significant effect on the main document.

Minority Spokesman on Finance Moses Asaga, commended the committee for their devoted work, but said the final document and the IFC as a corporate body lacks the credibility describing it as an engineering firm dealing with high pressure and cleaning systems in the United States.

He said the proposed projects were not specific and definite, while feasibility studies had not been taken to start them and cautioned that the World Bank and IMF could make things go sour for Ghana if they were not informed about the transaction.

Mr. Asaga also former deputy finance minister said under the HIPC initiative, there is a debt sustainability accessibility concession to which Ghana could benefit and if the country fails to notify them 'we tend to loose such benefits adding that we must get a more solid and responsible consortium to assess loans from.

Senior Minister and Member of Parliament for Sunyani East, J.H. Mensah, explained the context under which the loan was processed adding that the country had a major problem of infrastructure development and needed such financial support to implement the projects.

He gave the assurance that there would not be any form of discrimination in the implementation of the projects even to areas where members had shown open objection and rejection of the loan agreement.

Dr Kwabena Adjei, NDC-Biakoye opposed the loan agreement because the source was not known and explained that in capital financing one should be abreast with the people one was dealing with.