President Mahama made it quite clear in a speech at GIMPA this afternoon,that the NDC and the Minority in Parliament will oppose and vote against a $1 billion syndicated loan brought to Parliament for consideration.
The following are the reasons for this position.
The loan made up of a $ 250 million component from a consortium of Banks comprising Standard Chartered Bank, Rand Merchant Bank and Standard Bank of South Africa and a $ 750 million component from the AFRIEXIM Bank, will have grave implications for our economy if approved.
The term sheet for this loan has the following features.
• To begin with, it will add a colossal GHS 8 billion to our public debt in one fell swoop.
• The cost of insurance alone for the $ 250 million component is $ 40.625 million.
• Total interest payable and other costs on this $ 250 million, five-year tenor loan,amounts to $ 86.85 million.
• The total cost therefore for borrowing the $ 250 million component amounts to $127.50 million.
• For the $750 million component, interest payment and other costs excluding insurance premium and or collateral, come up to $383 million over its seven-year tenor.
• Put together, the $1 billion loan agreement will cost the taxpayer $ 351 million in interest and other charges.
• The repayment schedules of both components mean that this government will be saddling the new government that replaces it with an additional $1.438 billion to pay within five to seven years starting from the first quarter of 2025.
• Added to the total of $ 2.775 billion in 2025 and 2026 Eurobonds, the next government will have to cough up over $3 billion or, at the current exchange rate, GHS 24 billion,within 15 months of taking office just to retire and service four loan items.
• The $3 billion needed for this will virtually wipe out our net international reserves which will seriously undermine the economy.
• In the four years between 2025 and 2029, $ 3.7 billion or approximately GHS 30 billion will be required to retire maturing Eurobonds alone.
• This will be in addition to the tens of billions of cedis in debt service payment for other loans that will have to be paid from 2025.
