Despite a last-minute attempt to arrest the motion on grounds of lack of quorum, Parliament has approved a $750 million loan agreement with the Afrexim Bank for funding infrastructure projects and budget support.
The loan is part of a $1 billion dollar facility, the government is seeking to shore up its reserves as well as to pay for several infrastructure projects across the country.
The Minority previously opposed the loan agreement, but threw its weight behind it during the debate to avert what they call a collapse of the country’s economy if the loan is not approved.
The Chairman of the Finance Committee, Kwaku Kwarteng moved the motion while the Ranking Member on the Committee, Dr Cassiel Ato-Forson, during his contribution indicated government has not built the necessary financial buffers to pay back the loan.
The Government had expressed its intentions in the 2022 Budget Statement and Economic Policy of Government to raise up to the Ghana Cedi equivalent of $750 million under a syndicated term loan facility arrangement to support the implementation of the 2022 Budget.
The loan syndication approach was chosen following Government’s announcement that no Eurobond would be issued in 2022 under the International Capital Market Programme (ICMP) until market conditions improve.
This approach was necessitated because, at the time of the 2022 Budget approval, the spread of the new COVID-19 variants had led to the re-imposition of restrictions worldwide coupled with incidences of energy price increases and supply side disruptions, thereby limiting access to the international capital market.
According to the Finance Committee of Parliament, the government intends to secure the credit facility to finance critical flagship projects under the 2022 Budget.
This arrangement was necessary because of the decision by Government not to use the capital market to raise financing until market conditions improve.
Additionally, the increasing withdrawal of non-resident investors in Ghana’s domestic bond market with implications for the level of reserves of the Bank of Ghana and foreign exchange management generally requires the injection of additional foreign currency to shore up reserves.