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Opinions of Thursday, 16 January 2014

Columnist: Alhaji Alhasan Abdulai

US$3bn CDB loan challenges: Can we negotiate with China?

We might find it difficult to access the $3billion loan from China for the much needed infrastructural development project in Ghana.

This is what Mr. Anthony Akoto Osei, former Minister of Finance once said when Ghana signed the pact with the Republic of China for the loan. Perhaps in studying the agreement he got to know what many people in Ghana did not know.

The Chinese were in for business with Ghana and, therefore, would want to pursue a deal that would be beneficial to them. He saw clauses in the agreement that might be problematic to us.

For inexplicable reasons, his words might have been ignored. That should not be the case.We must always bend backwards to seek help from experienced hands in and outside parliament like Dr Akoto Osei and others like him once served as Ministers.

A few months down the line Dr Akoto Osei seems to be vindicated when the president cried out to the Chinese leadership to expedite action to allow the $3bn loan to flow as expected to Ghana for various development projects.

To be able to benefit from the loan, the former finance minister is advising the government to go back to renegotiate the agreement on the loan with the Chinese leaders.

The reason is simple; Ghana has been forced to pay more counterpart funds and penalties on the loan for no good returns.

For this reason, Ghana's ailing economy that requires to fix education, health and agriculture issues seems to be bleeding. We are not only required to pay more for the loan, we are really paying hard cash to the Chinese for various reasons under the loans agreement.

To stop the financial bleeding, the president, he said, should seek a total cancellation of the commitment fee attached to the loan and also seek a cutback on the "complicated" disbursement mechanism.

"I think the commitment fee should be completely cancelled," Dr. Akoto Osei said. "It is not typical for commercial loans. They need to also renegotiate the conditions for disbursement.

For example, if you go to the capital market to raise money, as soon as the transaction is completed, within two days the money is available. In this case, it has not come. The conditions for disbursement are too complicated. They need to renegotiate it; otherwise we are in trouble."