PARLIAMENT has approved a $750 million loan facility to fund or refinance various infrastructure development projects, and for liability management as approved in the 2019 budget.
The approval of the syndicated Bridge Loan facility, jointly being financed by the Standard Chartered Bank, United Kingdom, and the Standard Bank of South Africa, was not without objections from the Minority.
The chairman of the Finance Committee of Parliament and a member of the committee came face-to-face over the decision by government to obtain the loan facility.
The facility is a stop-gap measure to finance the 2019 budget, as government takes steps to raise up to US$3 billion from the International Capital Market.
Per the committee’s six-page report, a copy which the Ghanaian Times has, “whilst the necessary processes are ongoing for the 2019 Bond issuance, Government is sourcing this bridge facility as an interim measure to help keep Government’s economic programme for the year on track.”
The terms of the facility include a one-month U.S Libor plus a margin of 3.5 per cent per annum, a tenor of up to six months and an agreement fee of 0.32 per cent per annum.
Moving the motion for the adoption of the Finance Committee’s report on the facility and approval of same in Parliament yesterday, the chairman, Dr Mark Assibey-Yeboah, MP, New Juaben South, said the decision was consistent with government’s medium term debt strategy, and urged the House to approve the facility.
A member of the committee, Isaac Adongo, MP, Bolgatanga Central, seconding the motion, however, expressed worry over what he said was the short term financing of the budget.
In his view, the admission by officers from the Finance Ministry, during their engagement that “over the past few weeks, there has been declining capital inflows from offshore investors as well as increased rollover risks for maturing debt”, was an indication that investors were losing confidence in the Ghanaian economy for which reason capital inflows from offshore investors was declining.
Government, Mr Adongo said, should have focused on raising the $3 billion from the bond market rather than relying on the bridge facility, a temporary measure; wondering how the budget would be financed if government was unable to raise the $3 billion bond.
The economy, Mr Adongo asserted, would have crushed in two months ago if government had not gone in for the bridge facility, which he said gives credence to the fact that the economy was in crisis.
But, Dr Assibey-Yeboah said capital inflows from off shore investors was declining because interest rate in Ghana was on the decline and that investors were gravitating towards the United States of America where interest rates were going up.
The low capital inflows from offshore investors into the country, according to Dr Assibey-Yeboah, were a testimony of how well the economy was doing because investors were always in search of higher interests.
He said “Without doubt, the fundamentals of our economy are better now. The bridge facility is far cheaper and if not for [partisan] politics, nobody should oppose this.”
Meanwhile, the Finance Minister, Ken Ofori-Atta, was in the House on Wednesday, in response to an earlier order given by the Speaker, Professor Aaron Mike Oquaye, last Thursday.
The order followed the failure of the Finance Minister to appear in the House to answer four questions asked by three members on the Minority.
BY JULIUS YAO PETETSI