Parliament approves US$750 million loan facility

Parliament has by consensus approved a US$750 million loan facility to finance capital and growth related expenditure in the 2022 budget. 

The facility which was approved yesterday to support the 2022 budget is being sourced from the African Export-Import Bank. 

A report of the Finance Committee of the House on the facility said “this arrangement has become necessary because of the decision by government not to use the capital market to raise financing until market conditions improve.”

To be released in three tranches of €200 million, US$101 million and US$350 million, the facility has a three-year grace period and a four-year repayment period for the first two tranches and seven years for the third tranche. 

The first two tranches have seven years tenor and the third tranche, a 10-year tenor.

The facility also came with a 5.57 per cent interest per annum on the first trance and 8.81 per cent interest per annum on the second and third tranches. 

It attracted a 5.75 per cent margin inclusive of insurance for the first tranche and 6.25 per cent each for the second and third tranches. 

Upfront fee attracted 1.75 per cent flat for all three tranches, one per cent commitment fee for all tranches and a all-in-cost percentage of 6.49 per annum, 9.55 per annum and 9.33 per annum for the three tranches respectively. 

Projects earmarked for the facility include the Nsawam-Ofankor road (US$200 million), Ejisu-Konongo road (US$75 million), completion of Nsawam-Apedwa road (US$10 million), Suame interchange and local road network (US$47 million) and completion of flower pot interchange (US$35 million). 

The rest are completion of Sofoline interchange (US$35 million), construction of Kwabenya-Peduase road (US$10 million), completion of Eastern Corridor road lots five and six (US$70 million), completion of Enkyikrom-Adawso road project (US$98 million), purchase of rolling stock and spare part (US$30 million) and construction of stadia infrastructure for All African Games (US$140 million). 

According to the Committee’s report, the Minister of Finance explained in his meeting with members that “the approval of the facility is urgently needed to avoid the country from going bankrupt and help the country meet its obligations”. 

The report, signed by the Chairman of the Committee and MP for Obuasi West, KwekuKwarteng said that though Ghana has over the years accessed financing from the international market, same was not story this year. 

The lack of access to the financial market and the rising interest rate and exchange rate depreciation the report said “further exacerbated by the dwindling reserves of the Bank of Ghana from US$9 billion to US$3 billion”. 

Making a case for the facility to shore up the reserves of the Central Bank, the Committee report said “with a monthly demand of over US$600 million, the reserves of the Bank of Ghana may be exhausted in few months if urgent steps are not taken to shore up the country’s reserves”. 

Supporting the motion, though reluctantly, the Minority said it lend its support for the facility because the said loan was captured in the 2022 budget presented to the House in November 2021. 

BY JULIUS YAO PETETSI



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