Govt seeks $235m loans for infrastructure, social projects

BY: Musah Yahaya Jafaru
 Mr Ken Ofori-Atta — Minister of Finance
Mr Ken Ofori-Atta — Minister of Finance

The government is seeking parliamentary approval for loans totaling $235 million to undertake infrastructure and social projects in the health, agricultural  and tourism sectors.

The Minister of Finance, Mr Ken Ofori-Atta, laid the request papers for the loans in Parliament in Accra yesterday.

One of the facilities is a financing agreement between the government and the International Development Association (IDA) of the World Bank Group for a Special Drawing Rights (SDR) equivalent to $40 million to finance the proposed Tourism Development Authority.

There is another agreement for a SDR equivalent to $50 million to finance the Ghana Commercial Agriculture Project (GCAP).

Another loan request is a contract agreement between the government, represented by the Noguchi Memorial Institute for Medical Research (NMIMR), University of Ghana, and Shimizu Corporation of Japan for 1.68 billion Japanese Yen (about $14.9 million) for the construction of the Advanced Research Centre for Infectious Diseases at the NMIMR.

The government is also requesting the approval of the House for a financing agreement with the IDA for a SDR equivalent to $35 million to finance the proposed Public Sector Reform for Results Project (PSRRP).

There is also a supplier's credit agreement between the government and Brazil for $95.45 million to finance the establishment and strengthening of Agricultural Mechanisation Service Centres (AMSECs).

Finance Minister

Mr Ofori-Atta told journalists that the loans were to create efficiency in the health, agricultural and tourism sectors.

He said the real issue was whether the government would generate enough revenue to be able to support the interest and principal of the loans.

"We are very optimistic that future revenue inflows will be able to support that," he stated.

Cedi performance

Touching on the performance of the cedi against the dollar and other foreign currencies, Mr Ofori-Atta said the downward trend of the pound sterling, the euro and the South African rand against the dollar signified that the cedi was not doing badly.

For instance, he said, the euro was down by six per cent, the pound down by four per cent , the rand over 12 per cent, while the cedi was down by around seven per cent compared to 12.5 per cent last year.

"We are holding our own quite well," he said.

Fortunately, he said, the government, last Thursday, signed a $1.3 billion loan agreement with international banks to fund the purchase of cocoa for the 2018/19 season, due to open in early October.

He said the signing would make people comfortable about that.

"I think the issue of exchange rate is an issue that countries like ours will contend with for some time. But the future looks good. I expect that by 2023 or 2025 we will be moving towards a million barrels of oil a day and that should be able to anchor us," he said.

Mr Ofori-Atta-Atta said the government was structuring a centenary bond for $50 billion.

He said a successful century bond would make people pretty comfortable in the future of the need for infrastructure and stability for exchange rate.

"Looking at all the variables. I think the future looks good,"  he said