By William
Yaw Owusu
Friday
September 07, 2018
The opposition
National Democratic Congress (NDC)’s attempt to ‘sabotage’ the $2 billion
Chinese infrastructure financing agreement appears to have hit the snag.
This is
because the International Monetary Fund (IMF) Office in Accra has said it is
unable to tell whether or not the Akufo-Addo-led NPP administration’s barter
agreement with Sinohydro Corporation of China that would bring massive
infrastructure development, especially in the roads sector, is a loan.
DAILY GUIDE learnt that the first tranche of $500 million has already hit Ghana’s
account to allow the commencement of the various projects.
Vice President
Dr Mahamudu Bawumia has already described the deal as a game-changer.
IMF Reply
The IMF’s
Resident Representative in Accra, Natalia Koliadina, in response to a letter
written and signed by the Minority Leader, Haruna Iddrisu and Cassiel Ato
Forson, who is a ranking member of the Finance Committee, said she could not
readily give an answer to the queries raised by the NDC because of the
‘complexity of the transaction.’
“You asked the
IMF’s opinion on whether the agreement between the Government of Ghana and Sinohydro
Corporation should be classified as government debt under the programme, and
whether it would contribute to the stock of government debt,” the resident
representative said.
“We will use
the definition of government debt in the Technical Memorandum of Understandings
which has not changed since the inception of the programme, to make this
decision.”
Complex Transaction
The IMF said,
“Given the complexity of the transaction, I am unable to answer your question
immediately. I have been in consultations with headquarters, including the
Legal Department, and we are going to discuss this issue with the authorities
during the upcoming seventh review mission under the Extended Credit Facility.”
Sensing that
the $2 billion barter agreement, when concluded, could serve as a catalyst for
infrastructure development of the country and possibly dwindle their electoral
fortunes, the NDC dashed to the IMF Office in Accra on August 10 to seek to get
the Bretton Woods institution to classify the agreement as a loan which will
end up increasing the country’s debt stock.
Illegal Deal
They wanted
the IMF to stop the deal because they claim it’s ‘illegal’ even though the same
political grouping had helped in passing the agreement in Parliament before the
house went on recess in late July.
The opposition party members on the Finance
Committee had deliberated on the Master Project Support Agreement (MPSA)
between the Government of Ghana and Sinohydro Corporation Limited for the $2
billion for the construction of priority infrastructure projects before the
committee’s report was laid in the house for approval.
Bawumia’s View
Dr Mahamudu
Bawumia, who has been leading the negotiations, said the NPP government wants
to prove to Ghanaians what $2 billion can do for the development of a nation
like Ghana and assured that it’s going to be the game-changer in the
infrastructural development of the country.
The barter
transaction is basically tied to some bauxite deposits where the
government is expected to repay with refined bauxite (alumina/aluminum).
Priority Projects
The projects would involve road infrastructure
development, rural electrification, affordable housing, fish landing sites, to
strengthen economic and regional integration and reduce the cost of doing
business in the country.
Tamale, the home-town of Haruna Iddrisu, will be
witnessing its first interchange in history under the Chinese deal.
Finance
Committee
As explained by Chairman of the Finance Committee of
Parliament, Dr. Mark Assibey Yeboah, under the MPSA, Sinohydro, is responsible
for arranging the project financing for all the priority projects subject to
the mutual agreement of the parties.
“Sinohydro shall be solely responsible to enter into
the financing agreement (s) with any financial institution that agrees to
provide the Project Financing,” he stated when the agreement was being
approved.
He also said the Committee was further informed that
the MPSA is essentially a “barter” facility by which Sinohydro will implement
various EPC contracts for Ghana and the government repays with refined bauxite
(alumina/aluminum).
Already the integrated alumina development authority
bill has been passed by Parliament awaiting presidential assent to kick-start
Ghana’s industrialization process.
“To enhance and maximise the value to Ghana of its
bauxite resources, the Committee was informed that government, through the
Ghana Integrated Bauxite and Alumina Development Authority (GIBADA), will
establish a bauxite processing plant to process the raw bauxite into alumina
before shipping same to service the obligations under the MPSA,” he said,
adding “presently, raw bauxite was said to trade at about $24/tonne on the
international market whilst processed alumina trades at more than $300/tone.”
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