Reduced or not CDB loan still remains elusive says analyst, but Terkper dismisses

Ghana's chances of accessing the China Development Bank (CDB) loan facility remains elusive, according to a financial analyst, even though government has indicated the amount will soon be slashed from $3 billion to $1.5 billion.

Sydney Caseley-Hayford doubts the loan will come although the Finance Ministry intends to access only the second tranche of what the country should have received more than two years ago.

Finance Minister, Seth Terkper, said during his mid-year review of the 2014 budget to Parliament on Wednesday that he will soon present to the Legislature, a request to reduce the $3 billion China Development Bank (CDB) loan to half.

The loan facility is aimed at financing projects such as the Takoradi-Kumasi Western Corridor Infrastructure project, the Sekondi Free Zone project, the ICT enhanced surveillance project for the western corridor oil and gas enclave project, among others.

But Caseley Hayford is not convinced the country would even be able to access half of the loan.

“I know the Finance Minister has always said that the loan will be disbursed from China and we will get the benefits of it but up until now we have not seen the loan even though we have paid commitment fees and whatever else there is. I doubt it will come”, he said.

He adds that the reasons given by the ministry for why only $1.5 billion instead of the initial $3 billion will now be pursued are sketchy – a sign that accessing the revised amount of a loan facility that was signed in 2011 will still be a wild goose chase.

He said “at this stage we don't even know the reasons for the other $1.5 billion being dropped except that he [Seth Terpker] says that because of the temporary challenges that we have been through, we cannot access the previous $3 billion”.

In his view, Seth Terkper should have been a bit more forthcoming with facts on the specifics of the temporary economic challenges that informed the decision to reduce the facility.

Caseley-Hayford said on Newsnight Wednesday that even though the country has paid commitment fees on the loan facility, there won't be refunds if the country gets tired chasing the loan facility.

“It's a contract, it has been signed, there were some conditionalities attached to the contract which will ensure that certain things were done which we did not do at this stage…”, adding it is more the reason why the Finance Minister should have given more details why the  initial amount of the loan will not be accessed.

However, in a rebuttal the Finance Minister said on the same programme that assertions by Caseley-Hayford are wrong.

“We have been negotiating with CDB for the disbursement of the second tranche and then the remainder of the first tranche. Now they have insisted on the original terms of which most of the estimates were made with respect to the off-taker agreement which is the most important thing” he explained.

Also, as at June 2014, two out of four projects under the agreement have been signed and are being financed by the facility.

“These are the Western Corridor Gas infrastructure project ($800 million) and the ICT enhanced surveillance project for the western corridor oil and gas enclave project amounting to 150 million dollars”, the Minister had said diring the mid-year review.

  Story by Ghana | Myjoyonline.com | George Nyavor | [email protected]