General News of Wed, 5 Sep 201839
Synohyrdro agreement: IMF has vindicated us – Minority
The Minority in Parliament is convinced that an agreement between the Government of Ghana and China’s Synohydro Corporation will add to Ghana’s debt stock.
The $2 billion bauxite deal, which is expected to improve Ghana’s infrastructure has been described by government as a barter agreement.
But the Minority will have none of that. They insist it’s a loan, one which will result in an increase in the country’s already spiraling debt stock – which is around $154 billion.
They had hoped a letter to the International Monetary Fund (IMF) would clarify the issue, but that has not, at least not yet.
The IMF has written back asking for more time to dissect the issue as it is unsure what to describe the agreement.
Nonetheless, the Minority is sure that the final news will be in their favour.
Spokesperson on Finance, Cassiel Ato Forson says the Minority's criticism of the agreement is for the good of the country.
"We are not against the development of infrastructure for the Republic of Ghana but we have a responsibility to check the governemnt to make sure they do not misreport. You can see a clear attempt by the government of Ghana to hide public debt and that is our concern."
Mr Forson is baffled that government is insisting that the deal is a barter agreement and will add nothing to the country’s debt stock when particulars of the deal show otherwise.
“I do not understand why the government is creating an impression that it is not public debt but rather barter. The evidence available to us is that government of Ghana under the agreement, has a responsibility to mine the bauxite, refine it into alumna, find a buyer outside the country, sell to the buyer and collect the money and pay it into an escrow account and then use that to service the debt.
“Under the obligation in the technical memorandum of understanding, the government of Ghana has the responsibility in servicing the debt. This is nothing but a loan,” he said on Joy FM's news programme Top Story.
The Ejumako Enyan Esiam MP said his side already feels vindicated by the IMF’s response.
He believes the Fund will come to no other conclusion than the one they have been propagating since it will be using the definition of government debt in the Technical Memorandum of Understandings in determining what the agreement is.
“The terms as we asked for whether the methodology in calculating public debt has changed, for me she [the IMF representative in Ghana] is only telling us that the methodology hasn’t changed and the debt as defined at the beginning of the programme in the TMU still stands
“That for me answers the question and I know that at the end of the day the IMF headquarters and their legal department will clarify that position going forward…I feel good at this point,” he said.
But Chairman of Parliament’s Finance Committee laughed the suggestion off.
Dr Mark Assibey-Yeboah says if it was that straightforward, the IMF representative would have done so without seeking further advice on it.
“The IMF itself agrees that the ingenuity exhibited by this government is something they have not seen in recent times,” he said adding that the only example of it is an example in Kenya.
“And in that case, the IMF didn’t count that arrangement as public debt. Same with the ESLA bond, the IMF argued with us and when we pointed out a case to them in Nigeria, I think the IMF is confident that we know what we are doing.”
In any case, the New Juaben South MP says Ghanaians are uninterested in whether or not it’s a bond or loan, all they want to see is development.
“I think what the Ghanaian people want to see is that their roads are being fixed as to whether this is a loan or barter or loan, I don’t think it helps anybody.”
Providing an independent view on the issue, Head of Finance at the University of Ghana Business School, Prof Godfred Bokpin wants the Minority to hold on with the excitement.
He agrees that the issue is a complex one and cannot be described as a purely barter transaction, adding it might have an element of debt in it.
If it was that straightforward, the IMF Ghana office would have responded, he said adding “I think it requires a little bit of legal interpretation, but if you look at it broadly it is very difficult to classify the transaction as purely a barter transaction.
“If you look at it within our own public financial management provision, it has certain features that qualify as debt and of course it has certain features that qualify as a barter agreement and that is the difficulty that we have.”
He wants both government and the opposition to leave the IMF to decide on the issue but wants the views of the Minority to be considered.