Ghana and Spain signs debt swap agreement

Accra, June 26, GNA - Ghana and Spain on Friday signed a 65 million Euro Grant and Debt Swap agreement in Accra to support the country's socio-economic development.

Beneficiaries of the agreement include the Ministries of the Interior and Energy as well as the Ghana Immigration Service (GIS). Out of the 10 million euros allocated to the Interior Ministry, eight million euros would be disbursed to the Ghana Police service and two million euros to the GIS to help improve on their operations. The rest of the fund is slated for the rehabilitation and expansion of Damango Water Supply, the National Hospital Network and the Rural Solar Electrification projects.

Dr. Kwabena Duffuor, Minister of Finance and Economic Planning and the Spanish Ambassador, Mrs Julio Olmo signed the agreement. Mrs Olmo said the debt swab for development Programme would write off the 44 million-dollar debt contracted by Ghana before 2003 and converted it into grants to support government projects. "This instrument allows the debt obligations of Ghana towards Spain to be transformed into investment projects, which will impact on the economic development of Ghana," she said.

"The debt swap mechanism will imply that the debt service affected by the cancellation will be deposited in a Ghanaian-Spanish Trust Fund." Mrs Olmo said Ghana's obligation to feed the fund would terminate after a successful disbursement of 40 per cent of the principal debt accrued after which the 'freed-up resources' would be assigned to finance development projects in Ghana.

"This decision represents a proof that, even in the context of the global crisis, we attach importance to supporting progress in Sub-Saharan Africa and Ghana in particular," Mrs Julio Olmo stressed. She disclosed that at the ECOWAS-Spain High Level Meeting held in Abuja, last week, her government chose Ghana as a beneficiary under the 70 million dollar "Export Plan of Infrastructure to Sub-Saharan Africa". Mrs Olmo explained that the grants to be allocated to Ghana under the project would be used to develop the renewable energy sector. The Finance Minister said the two agreements would help Ghana to channel its debt obligations into investment projects to facilitate economic growth and human capacity development.