The $350m IF"C" loan - 16 days more

There is 16 days more to go for the International Finance Consortium (IFC)’s $350m to land in Ghana and be fully lodged in the Ghana government accounts.

The loan agreement, originally for $1b but forced to be scaled down to a first tranch of $350m following trenchant criticisms by the NDC Minority in Parliament, was finally approved by the NPP rubber-stamp Majority plus their PNC acolytes in Parliament.

The loan agreement required that a Sovereign Guarantee should be issued to the “IFC” by 31 July 2002 and that the funds should be transferred into government accounts within twelve weeks or 90 days; that is, by 31 October 2002.

That leaves the NPP government exactly 16-days within which to deliver, or else be ready to answer some pertinent questions from an expectant public. The relevant terms of the agreement read as follows:

Paragraph 2.3 “…To assure this interest rate all documents must be completed and finalised before 15 July 2002 and the requisite Unconditional Sovereign Government Guarantee must be issued and deposited by 31 July 2002. Paragraph 8.1 “…The first tranch of funds, will be transferred, beginning approximately twelve weeks after receipt of the Sovereign Government Guarantee.”

Paragraph 13 “…A copy of this executed F.P.A. (Final Project Agreement) must be received by fax at the International Finance Consortium by 15 July 2002 at the latest, to maintain and assure the validity of this loan.”

It was in order to beat these deadlines that the government rushed to have the loan agreement approved before Parliament rose on 12 July 2002.

Senior Minister J.H. Mensah’s explanation at the President’s recent press conference, and that of President Kufuor’s own response in an answer to a question that a statement will be issued on the loan beg’s the question.

What was approved by Parliament was the final loan agreement, not a request to negotiate for a loan. Once approved therefore, no further negotiations are envisaged and no further statements are required. The loan must land in Ghana by 31 October 2002 or the government must be ready to admit that it has been duped and prepared to repay $350m for which there is no back-to-back security guarantee whatsoever.

The nearest to a security guarantee in the loan agreement is in paragraph 7 which provides that “Should the Consortium fail to perform its obligation with timely Bank to Bank SWIFT Transfers, the Sovereign Government Guarantee will be returned without cost, unused and unconditionally to the government within ten working days from the due date of the first tranch of the funds.”

In other words, if the money is not in Ghana government account by 10 November 2002, the Sovereign Government Guarantee must be returned to the Government of Ghana.