Parliament on Wednesday approved a loan facility agreement between the Ghana government and African Export-Import Bank (Afreximbank) for an amount of $750 million to finance capital growth-related expenditures in the 2022 budget.
The government had expressed its intentions in the 2022 Budget Statement and Economic Policy of the Government to raise the Ghana cedis equivalent of the $750 million under a syndicated term loan facility arrangement to support the implementation of the 2022 budget.
The loan syndication approach was chosen following the 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.
The $750 million facility for budget support comprises two tranches – tranche A is made up of €200 million and $101 million while tranche B is made up of $350 million.
The financing terms of the loan facilities include three years grace period for each of the stated amounts, whereas the repayment period for both the €200 million and the $101 million is four each, while that of the $350 million in seven years.
The interest rates for the €200 million, the $101 million and the $350 million are 5.57 per cent per annum, 8.81 per cent per annum and 8.81 per cent per annum respectively.
Proceeds from the loan would be used to finance critical infrastructure related to sectors such as roads, energy, railways, and health as captured in the 2022 budget.
The list of projects to be financed from the $750 million loan facility include Ofankor-Nsawam Road $200 million; Ejisu-Konongo Road $75 million; completion of Nsawam Apedwa Road Project $10 million and the Suame Interchange and local road network project $47 million.
The rest are completion of Flower Pot Interchange, Legon-Accra $35 million; completion of Sofoline Interchange $35 million; construction of Kwabenya-Peduase Road Project – Government of Ghana Funding $10 million; completion of Eastern Corridor Lots 5 and 6 $70 million; completion of Enkyikrom-Adawso Road Project $98 million, purchase of rolling stock and spare part $30 million and construction of Stadia Infrasructure for all Africab Games $140 million.
Mr Osei Kyei-Mensah-Bonsu, the Majority Leader, appealed to Members of the House to approve the loan facility to enable the government execute its infrastructural agenda in the 2022 Budget.
Mr Haruna Iddrisu, the Minority Leader, said the country was suffering from a debt overhang, which could lead to the stagnation of the growth of the economy and that it was going to further worsen the cost of living for Ghanaians.
He noted that Minority Caucus was not against the $750 million facility and that they were only against the addition of $250 million, which was not captured in the 2022 Budget and Economic Policy Statement of the government.
Mr Kwaku Agyeman Kwarteng, the Chairman of the Finance Committee of Parliament, in his report, noted that the approval of the facility would enable the government to meet its projections in the 2022 budget and support the government’s liability management and ensure exchange rate stability.