Govt failed to seek parliamentary approval for IMF support - Minority
The Minority in Parliament has accused the President, Mr John Dramani Mahama, of violating the 1992 Constitution by failing to seek parliamentary approval for the three-year Extended Credit Facility (ECF) agreement between the government and the International Monetary Fund (IMF).
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It has, therefore, called on the President to take immediate corrective measures and cause the Speaker of Parliament, Mr Edward Doe Adjaho, to recall the House from recess to approve or reject the loan agreement.
It warned that if by the end of September this year President Mahama had failed to heed the call, it would use all avenues, including a court action, to ensure that “the sanctity of the Constitution is protected”.
At a press conference in Accra yesterday, the Member of Parliament (MP) for Effutu, Mr Alex Afenyo-Markin, who was one of the MPs who put across the Minority’s case, also called on the IMF to cease further disbursement of the ECF until Parliament had approved it.
"In fact, we are surprised that the IMF, with all its experience in the surveillance of its programmes, will condone such an egregious act by the government of Ghana,” he said.
Background
In August 2014, the government initiated moves to sign an agreement with the IMF to help support stronger policy adjustment, restore market confidence and revive Ghana’s “transformational agenda”.
After protracted negotiations, the IMF executive board, on April 3, this year, approved an ECF of $918 million to be disbursed over a three-year period.
With the approval, the IMF released $116.6 million to the government.
Constitutional provisions
Mr Afenyo-Markin quoted Article 181 of the 1992 Constitution to buttress his point and said the President had, by his action, failed to live up to his oath to abide by the laws of the country.
The article states: “No loan shall be raised by the government on behalf of itself or any other public institution or authority otherwise that by or under the authority of an Act of Parliament.”
Article 181 (4) states: “An Act of Parliament enacted in accordance with Clause (3) of this article shall provide (a) that the terms and conditions of a loan shall be laid before Parliament and shall not come into operation unless they have been approved by a resolution of Parliament and (b) that any moneys received in respect of that loan shall be paid into the Consolidated Fund and form part of that fund or into some other public fund of Ghana either existing or created for the purpose of the loan.”
Article 181 (6) indicates: “For the purpose of this article “loan” includes any moneys lent or given to or by the government on condition of return or repayment, and any other form of borrowing or lending in respect of which (a) moneys from the Consolidated Fund or any public fund may be used for payment or repayment or (b) moneys from any fund by whatever name called established for the purposes of payment or repayment whether directly or indirectly, may be used for payment or repayment.”
"By the combined effects of Article 181 (3), (4) and (6), President Mahama has violated the Constitution as far as the IMF EFC loan is concerned,” Mr Afenyo-Markin said.
He added that despite the demand for a recall of Parliament to rectify the violation of the 1992 Constitution, the Minority reserved the right to use all avenues to ensure that the sanctity of the Constitution was protected should the government be adamant.
The Greek example
Mr Afenyo-Markin recalled that in the case of the bail-out programme for Greece, the IMF insisted that the Greek Parliament should approve of the framework for the bail-out condition even after the people of that country had rejected those conditions in a referendum held singularly for that purpose.
“We do not want to believe that the IMF uses different rules for different countries. This is an issue of good governance practice and we would like to believe that the IMF stands for this principle. While conceding that the onus of responsibility for complying with national laws lies first with the government, when the attention of the IMF is drawn to the matter, it must respond appropriately,” he said.
Lending arrangement
The Minority Spokesperson on Finance, Dr Anthony Akoto Osei, explaining what the agreement entailed, said the EFC was a lending facility that provided a sustained programme arrangement over the medium term in anticipation of protracted balance of payment problems.
In return for the loan, he said, the government pledged to undertake programmes and activities which were to be monitored and assessed by the IMF under what was called “performance criteria” on a periodic basis.
"These criteria include a floor on the primary fiscal balance, a ceiling on the wage bill, a floor on net international reserves, a ceiling on net domestic assets of the Bank of Ghana (BoG), a ceiling on the net change in the stock of arrears, a ceiling on the gross financials of the BoG to the government, non-accumulation of external arrears, non-accumulation of domestic arrears and a ceiling on contracting or guaranteeing a new non-concessional external debt,” he said.
Dr Osei said in fulfilment of the monitoring and assessment requirements, the Executive Board of the IMF, on August 31, 2015, completed the first review of performance under the ECF programme and approved an additional disbursement of $116.6 million to the government.
“This means that from April 3 to date, the government has received a loan of about $233.1 million from the IMF,” he said.
“As an aside, we note that in completing the review, the IMF Board granted waivers for government’s non-observance of two performance criteria, that is, those relating to non-accumulation of external arrears and gross credit to the government,” he added.
