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Business News of Tuesday, 4 September 2018

Source: Starrfmonline.com

IMF yet to decide on Ghana’s $2bn Sinohydro deal

The IMF has written to the Minority asking for time to decide whether the move by the government of Ghana to exchange the nation’s bauxite for $2billion to fund infrastructure projects from China constitute government debt.

The Minority through its spokesperson on Finance Casiel Ato Forson last month wrote to the IMF requesting for its opinion on whether the agreement between the GoG and Sinohydro Corporation could be classified as government debt under Extended Credit Facility programme, and if it could also contribute to the debt stock.

Acknowledging the receipt of the letter by the Minority in a letter dated August 30, the IMF’s Ghana Representative Natalia Koliandina stated that even though the definition of government debt in the Technical Memorandum of Understandings has not changed, since the inception of the program, the IMF needs time to properly comment on the Minority’s request.

She said: “Given the complexity of the transaction, I am unable to answer your question immediately.

“I have been in consultations with Headquarters, including the Legal Department, and we are going to discuss this issue with the authorities during the upcoming seventh review mission under the Extended Credit Facility.”

Meanwhile, government has justified its decision to exchange Ghana’s bauxite for two billion worth of infrastructure from China in the agreement which was approved by Parliament last month.

The said facility would be in exchange for alumina processed from Bauxite deposits in the country as announced by Finance Minister, Ken Ofori Atta in the mid-year Budget Review.

Mr Ofori-Atta said in the mid-year budget review that Sinohydro Group Limited is expected to “provide US$2 billion of infrastructure including roads, bridges, interchanges, hospitals, housing, rural electrification, in exchange for Ghana’s refined bauxite.”

The Deputy Information Minister Kojo Oppong Nkrumah and the Deputy Roads and Highways Minister Anthony Karbo argued that the deal is a bold decision by the Akufo-Addo administration to tackle the country’s infrastructural deficit.

“The agreement as we have it now means that Sinohydro will on their own finance about 2 billion worth of infrastructure and in return, we pay back with bauxite, alumina or aluminium,” Mr Oppong Nkrumah stated.