General News of Tue, 11 Sep 201822
Stop confusing Ghanaians; $2bn bauxite deal is a loan – Minority
The Minority in Parliament has urged government to stop confusing Ghanaians and accept that the $2 billion bauxite deal is a loan and not a barter deal.
In a statement, the NDC Member of Parliament for the Ajumako/ Enyan/ Essiam Constituency in the Central region Casiel Ato Forson said the arrangement being used by the Akufo-Addo led government is a similar to the $3 billion petroleum-based China Development Bank (CDB) loan agreement the country went for when it wanted to build its gas infrastructure.
Government has justified its decision to exchange Ghana’s bauxite for two billion worth of infrastructure from China in the agreement which was approved by Parliament last month.
The said facility would be in exchange for alumina processed from Bauxite deposits in the country as announced by Finance Minister, Ken Ofori Atta in the mid-year Budget Review.
Mr Ofori-Atta said in the mid-year budget review that Sinohydro Group Limited is expected to “provide US$2 billion of infrastructure including roads, bridges, interchanges, hospitals, housing, rural electrification, in exchange for Ghana’s refined bauxite.”
The Deputy Information Minister Kojo Oppong Nkrumah and the Deputy Roads and Highways Minister Anthony Karbo argued that the deal is a bold decision by the Akufo-Addo administration to tackle the country’s infrastructural deficit.
The Minority last month wrote to the IMF requesting for its opinion on whether the agreement between the GoG and Sinohydro Corporation could be classified as government debt under Extended Credit Facility programme, and if it could also contribute to the debt stock.
Acknowledging the receipt of the letter, the IMF’s Ghana Representative Natalia Koliandina stated that even though the definition of government debt in the Technical Memorandum of Understandings has not changed, since the inception of the program, the IMF needs time to properly comment on the Minority’s request.
But, the minority in their statement maintain that the deal is a loan because per the agreement brought to Parliament, “Sinohydro is borrowing from International Commercial Bank of China (ICBC) to fund the infrastructure projects for GoG [Government of Ghana], adding that “Sinohydro, therefore requested for a Letter of Support from the Government of Ghana as a Sovereign Guarantee.”
“With the letter of support, Sinohydro then assigns all its rights and obligations under the arrangement to ICBC. Is Ghana so unattractive in the capital market as to fall on a Chinese company to front for us in borrowing from the International Commercial Bank of China (ICBC) which we have done business with in the past?”
“Mr. Vice President, you and I know that in conventional practice, a Letter of Support as a Sovereign Guarantee is only required in loan transactions and not in barter arrangement.”
The statement added that “the attempt to confuse the issues is understandable since the NPP vociferously rejected this structure while in opposition.”