Chinese loan facility can push Ghana to HIPC – Ato Forson

The Minority Spokesperson on Finance, Casiel Ato Forson, says the decision by the government to secure a Chinese loan facility to support its ‘One District, One Factory’ policy, among others, can push Ghana into a status of a Highly Indebted Poor Country (HIPC).

“This is because debt to Gross Domestic Product (GDP), which currently sits at 72 per cent, will balloon to over 125 per cent of GDP, which would be unsustainable,” he said.

Government, led by Vice President Dr Mahamudu Bawumia, announced on Sunday that it had reached an agreement with the Chinese government which will translate into US$15 billion of investment in Ghana.

“The Peoples Republic of China and the State and Private Sector Enterprises have together committed to support the economic transformation agenda of Nana Addo Dankwa Akufo-Addo. So far the commitment that we received in China before leaving amounted to 15 billion dollars,” he disclosed.

According to the Vice President, the quantum of the investment could rise to US$ 19 billion as talks for a top-up of US$ 4 billion was ongoing.

The amount could increase to as much as US$ 21 billion dollars as the two countries go into discussions over the remainder of a US$ 3 billion facility agreed with the outgone government, which was yet to be released.

But in an interview with the media in Parliament yesterday, Mr Forson, a former Deputy Finance Minister said, “the New Patriotic Party (NPP) formed government’s u-turn on loans is shocking.”

“Clearly, we are witnessing times that a government which, once upon a time, promised that they are not going to borrow, chasing after loans. They have huge appetite for debt to the extent that, as we speak, they have borrowed US$ 2.25 billion in their first 100 days, and are also going to borrow another US$ 2.5 billion for the energy sector,” he said.

The model of financing government projects was a topical issue in the run up to the 2016 general elections as the NPP, on several occasions, echoed their commitment to harness local funds to support their campaign pledges whiles criticising the Mahama-led administration of plundering Ghana into debt distress.

This departure, Mr Forson said, smacks of double standards and ingenuity.

“Whether it comes today or tomorrow, this debt is a serious matter because it is going to plunge this country into an era of debt distress. We are going to be very stressful as long as this loan is concerned and we must be mindful,” the MP said.

Mr Forson said explanations that the new facility would not be added to Ghana’s debt stock, because natural resources were going to be used to leverage the facility, was one of the attempts by the government to use economic jargons to “deceive” the people.

He made reference to the US$3 billion China Development Bank (CDB) facility and the Bui Dam project, where oil and cocoa were used as collateral as the same conditions under which the current government was entering to access the facility.
By Julius Yao Petetsi

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