Parliament has approved a $750 million loan facility to help shore up the rapidly dwindling reserves of the Bank of Ghana.
According to a report by Parliament’s Finance Committee, the reserves of the Central Bank have declined from $9 billion to about $3 billion.
Ghana’s financial situation is said to be so dire culminating in the government returning to the International Monetary Fund (IMF) for respite.
With the negotiations expected to last months and even years, the government has turned its sight on a syndicated term loan facility arrangement of the cedi equivalent of $750 million.
During the consideration of the report of the loan facility on the floor of Parliament on Wednesday, July 20, 2022, the House was informed that with a monthly demand of over $600 million, the country risks going bankrupt if nothing urgent is done.
“The international capital market is not available to Ghana this year as a result of the downgrade of the country’s credit rating by international rating agencies. The Government’s intention to raise funds from the domestic bond markets did not also yield the desired result. Consequently, the economy is presently challenged by rising inflation. rising interest rates, exchange rate depreciation and increasing energy cost. These challenges are further exacerbated by the rapidly dwindling reserves of the Bank of Ghana which have declined from US$9bn to about US$3bn. With a monthly demand of over US$600 million, the reserves of the central bank may be exhausted in few months if urgent steps are not taken to shore up the countries reserves.”
“The Minister [Ken Ofori-Atta] further indicated that there is the urgent need for the Government to secure the US$750 million facility to help shore up the reserve position of the Bank of Ghana to avoid the country defaulting on its international commitments and also to avoid the country moving into insolvency. The Minister explained that the facility may seem expensive on the face of its terms but is a reflection of market overall conditions in Africa as evidenced by the cost at which many African countries borrow from the international market.”
Some of the projects to be financed from the loan include the Ofankor-Nsawam Road, Suame Interchange, Eastern Corridor Road and the construction of stadia infrastructure for next year’s All African Games.
