NPP Cries Over $300m ‘Dubious’ Loan

From Left: Osei-Kyei Mensah, Akoto Osei and Isaac Osei

Ghana is likely to attract economic sanctions from the United States and the European Union (EU), as it pushes for a $300million 'dodgy' loan from Russia, according to the New Patriotic Party (NPP) Members of Parliament.

It emerged that government has decided to contract a $300 million loan facility from a Russian bank, VTB Bank Capital, which has also been slapped with sanctions by the US and the EU as part of sweeping economic sanctions last month against Russia for its support for rebels in eastern Ukraine and also for fuelling violence in that part of the country.

The general sanctions against Russia, which are currently hitting hard at the country's oil industry, banking industry, shipping industry and the military, were sparked by the downing of a Malaysian airline, MH17, in eastern Ukraine by the pro-Russian rebels, killing all 298 passengers on board.

The $300 million loan, which was approved only by the majority National Democratic Congress (NDC) MPs against the advice of government's own legal advisor, the Attorney-General, as well as the Minority in Parliament, was to be used for peace-keeping operations by the Ghana Armed Forces.

The Minority NPP, who made this known at a press conference yesterday, accused the NDC government of failing to use the National Security to do proper due diligence on the Russian bank, VTB Bank Capital, as well as other co-lenders who are yet to be named by the government in the loan deal.

Suspicion
According to the Minority, VTB Bank has entered the international market trying to source $1.5 billion from banks in the US; but its attempt suffered severe setback because of the US and EU sanctions.

The Minority Spokesperson on Finance, Dr Anthony Akoto Osei, who addressed the press conference, said apart from the highly unfavourable interest rate of LIBOR plus 7% (London Interbank Borrowing Rate) for the loan which has normal benchmark between 3% and 4%, VTB Bank would also be paid an upfront fee of $5.5 million and management fee of $6 million, both consisting of 3.9% of the loan.

“How can Ghana pay a total of $11.5 million to VTB Bank Capital who is to act as lender, arranger and facility agent for managing its portfolio?” Dr Akoto Osei queried, stressing that the arrangement raises serious suspicions.

Dubious
The Minority spokesperson minced no words in pointing out that the upfront fees, management fee and 7% mark up on LIBOR, all smack of a dubious transaction which will have serious repercussions on Ghanaians.

The group also noted that the $300 million loan which comes with 'unrealistic' terms, will definitely jeopardise Ghana's chances of securing a bailout from the International Monetary Fund (IMF) because the IMF will not tolerate such 'bad' loans and their consequential repayment terms.

The Minority said unless the government does something urgently about this situation, the IMF bailout could also elude it.

The NPP explained that it abstained from approving the loan which was endorsed by the Majority not because it is against securing funds to assist the military in its operations, but because the terms of the loan are bad and will not help Ghanaians in general.

“We as Minority have always stood for the best interest of the nation and consistently advised the government against dubious loans like STX and the CDB loans in which the nation has lost huge amounts of money which could have been used to develop some needy sectors. Even though those loans did not materialise and now the reality is dawning on us, with this $300 million VTB loan, we are saying it is a bad loan for the nation and its people and therefore washed our hands off it completely in Parliament,” the Minority said.

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 By Thomas Fosu Jnr