Parliament approves over $10bn loans in 26 months

Documents available to the New Statesman from Parliament House indicates that from June 2, 2009 to August 26, 2011, Parliament gave its approval to loans, totalling $10.04 billion. This includes 9,379.62 million in US dollars and 439,664 million in Euros.

Further checks made by this paper indicates that a total of $18.9 billion worth of loans have been presented to Parliament for approval since President JEA Mills took office in January, 2009.

The approved loans include $3 billion from the Chinese Development Bank, $1.7 billion from both the World Bank and the International Monetary Fund for budgetary support, $1.5 billion Suppliers' Credit from STX for housing, and the $105 million from the Brazilian Development Bank for the purchase of the Embraer 190 aircraft and the construction of a hangar.

Others include $127.5 million from the Exim Bank of China to finance the Ghana e-Government Platform Project, € 60 million for the acquisition off two C-295 military jets, $192 million for the National Electrification Scheme for the Northern and Upper East Regions and $100 million for housing and strategic equipment for the Ghana Army and Air Force from the Poly Technologies Inc. of Beijing China.

From the $10 billion, an amount of $2.158 billion has been for projects by the Ministry of Water Resources, Works & Housing. The Ministry of Energy has been allocated $492 million and another $410 million has gone to the Ministry of Roads. This does not include the equivalent of $305 million raised through the Ghana Cedi bond issue, which is attracting an interest rate of 14% per annum. An additional $346.70 million has gone to the Ministry of Defence.

On top of this the NDC has increased Ghana's domestic debt to more than GH¢12 billion. At the end of 2008, when the New Patriotic Party left office, Ghana's domestic debt stood at GH¢4.8 billion (or $3.170bn in today's exchange rate). At the end of 2010, under the National Democratic Congress, this had shot up to Ghc8.28bn ($5.47bn), increasing further this year.

President J A Kufuor also left an external debt of $4bn.

Nearly half of the loans approved by Cabinet or the Executive has not been approved by Parliament. Notable among them are the $1.8bn from China to build the Eastern Corridor Road, which has now been discontinued after the Minority in Parliament raised serious concerns about its constitutionality. Another one, was the €442 million from a husband and wife, who run a $5,000 clay-manufacturing firm in the Czech Republic.

This credit facility from Opus 7 was to construct 12 district hospitals at an exceptionally high unit cost of $40m and to procure 200 ambulances. There are currently 70 districts in the country without hospitals. It took the diligence of the Danquah Institute, a research centre, to expose the lender and the exorbitant nature of the loan.

According to Sophia Kokor of the Danquah Institute, “there is an inherent danger in this obvious mad rush for loans. Not enough value for money assessment is being done, as we saw in the $1.5 billion STX and now the $3 billion Chinese facility. We risk not been able to service our debts in the near future as happened in 2000. If we continued this way, between 2015-2020, Ghana might not even have enough money to pay civil servants, health workers, teachers and others and the results could be massive cuts in critical social spending areas, such as education and health.”