Minority attacks $19bn China loan; says it’ll plunge Ghana into debt distress

The Minority in Parliament has criticised the government for negotiating about $19 billion with China, and indicated that the loan would plunge the country into a Heavily Indebted Poor Country (HIPC) status.

Interacting with journalists in Accra Tuesday, the Minority Spokesperson on Finance, Mr Cassiel Ato Baah Forson, said the loan facility, which would raise the country’s debt by 50 per cent, would raise the country’s debt to Gross Domestic Product (GDP) of 72 per cent to about 130 per cent.

“It is going to plunge the country into an era of debt distress. We are going to be very stressed as debt is concerned.

“Ghana’s GDP is approximated at $45 billion. They are giving us a debt half of the size of the country’s economy. Ghana is going to be debt stressed because of this”, he said.

Vice President Dr Mahamudu Bawumia led the government team for the $15 billion funding partnership agreement and commitment reached between the Government of Ghana and China. There is an opening for an additional GHc4 billion during his recent visit to that country.

He said the funding partnership with China was not based on the traditional model of borrowing and aid, and that it was based on the bargaining power of the country’s natural resources such the 2.8 billion metric tonnes of iron ore deposits, 960 million metric tonnes of bauxite, 413 million metric tonnes of Manganese and not to mention Gold and Cocoa.

Contradiction

Mr Forson wondered why the government had now developed interest in borrowing contrary to earlier stance.

“We are witnessing times when a government which says it is not going to borrow has now developed appetite for debt to the extent that as we speak in the first few months, they borrowed GHC2.25 billion.

They are also to borrow GHC2.25 billion for the energy sector”, he said.

Public debt

Mr Forson said the $19 billion was going to be a public debt as it would be funded by government revenue.

He said government tax policy might be changed as a result of the loan.

“People are going to invest. Whether it will come tomorrow or the next day, this debt is a serious matter”, he said.

The CDD deal

As part of the negotiations, China would be extending the remaining $2 billion CDD loan to Ghana.

Mr Forson said he was disappointed that a party that boycotted Parliament as a result of the $3 billion CDD loan, now assumed that it was good.

He described the twist as hypocritical on the part of the government and indicated that he wished them well.

Mr Forson said the Minority would study the agreement critically when it came to Parliament, and indicated that that would determine the Minority’s posture towards the facility.