Parliament failed Ghana on $1bn IFC loan

The Ghana Centre for Democratic Development (CDD-Ghana) has faulted Parliament for not subjecting the controversial $1billion IFC loan agreement to stringent due diligence.

According to the CDD, given the several unanswered questions surrounding the loan agreement, Parliament should have subjected it to the stringent due diligence possible, and not the partisan manner it handled and approved it.

But minority leader, Alban Bagbin says the minority group (NDC MPs) exercised their duty responsibility, and in a non-partisan manner, the National Concord, a private-owned newspaper that has been following the IFC loan saga reports.

Bagbin said although the minority would like to amend its method if they had to take another look at the loan agreement, he believed their interventions and calls for caution were based on the overriding consideration of the national interest.

“No member of the majority NPP was immediately available for comment by press time, Friday evening, but during the debate on the loan agreement on the loan, the majority insisted that the minority was only out to scuttle the loan agreement. Some even described the NDC’s position as having been inspired by evil intent”.

The CDD’s comments, contained in the Democracy Watch, its quarterly newsletter that discusses issues of governance, came three months after Parliament had approved the loan. It was though that at the time the controversy raged, think-yanks and non-governmental organizations like the CDD, the Institute of Economic Affairs (IEA), Ghana Integrity Initiative (GII) and the Centre for Policy Analysis (CEPA) should have held public discussions and seminars to provide independent analysis of the loan agreement, and guide the public quest for unbiased information.

Also contributing to the lack of adequate information on the agreement, Parliament sources point out, is the absence of strong research team for the various standing committees of the House to dig up information independently, and make their findings available to MPs to enable them make informed decisions on bills and, in particular, loan agreements. This deprives Parliament of the capacity to scrutinize issues brought before for an informed decision.

Bagbin thinks that, perhaps there was a disconnection between Parliament and civil society and that the minority for instance, should have approached agencies and think-tanks to formally apprise them of the situation. “We’ll have to do that next time,” he said.

The CDD noted that in its critique in the newsletter that at first blush, the loan for a HIPC country without a sovereign credit rating, would appear like a bargain for Ghana. That is, if one focuses only on the relatively low nominal interest rate.

However, the unprecedented size of the loan, the professionally unsatisfactory and inadequate form and six-page document presented to the Parliament of Ghana, as a long agreement (including the absence of definitions, covenants, representations and warranties, and other such features of standard international loan agreements), and the intense controversy surrounding the entire matter, including doubts about the bonafides and identities of the lenders, should have caused Parliament to subject the loan to the most stringent due diligence possible.

“Instead, Parliament ‘fast tracked’ the approval process, in a partisan acquiescence to the wishes of an executive that did not appear to have the patience or tolerance for too many probing but necessary questions,” CDD noted.

Conceding that partisanship may not in itself be a bad thing and that it is not possible or desirable to expunge partisanship from the business of Parliament, CDD argued that Members of Parliament should have subordinated their partisan interest to the national interest.

“The materiality and magnitude of the issues at stake in this IFC $1 billion loan affair required of Parliament the utmost diligence, seriousness and regard for the national interest in ensuring that all material questions and doubts were conclusively and satisfactorily answered”.

The loan is backed by a sovereign guarantee an under the agreement, government was to have received the first tranche of 350 million dollars last week. The money is yet to come.