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Salary payments in limbo over $1bn gov’t loan approval

Source The Ghana Report

Deputy Finance Minister Kwaku Kwarteng has revealed that government may struggle to pay salaries should Parliament refuse to pass a $1 billion Afreximbank loan agreement.

According to the chairman of Parliament’s finance committee, the loan which is currently before Parliament will also assist the country to meet its debt obligations.

The passage of the loan has stalled due to opposition from the Minority in Parliament.

According to them, the government has not justified what the funds would be used for.

They, therefore, want the government to provide the committee with full documentation on the proposed expenditure to enable them to make a meaningful decision.

Speaking to the media on the development on Thursday, 14 July 2022, the Ranking Member on the Finance Committee, Dr Cassiel Ato Forson, said the government should provide detailed information on the funds.

“They have not told us what they want to use the proceeds for, so we cannot give you blanket approval for ‘chop chop’,” he said.

He also pointed out that the document tabled before the Committee had a fundamental defect.

He explained that “what is in the memorandum to Parliament and what is in the loan agreement has some differences. In one breath, we were called upon to approve a loan of 750 million, but what is in the agreement has two legs – tranche A and B. One is in euros and one in dollars, so that will mean that Parliament will have to amend what was brought to us, so we called to question the competence of the people that sent the document to us.”

He added that “the government’s insatiable appetite for borrowing must stop.”

But the deputy finance minister insists that the loan is critical for the country’s short-term survival.

“We will need to pay our salaries; we will need to service our debt. There are things to do right now that require a facility like this to be procured.

“That is why some of us support government here and hope that we will really deal with our debt matters that are not recent and they have been piling up over the years that we would come together and formulate reformed actions that are needed to deal with this once and for all,” he told Accra based Joy News monitored by theghanareport.com on Tuesday.

The Finance Ministry is seeking Parliament’s approval for a $750 million loan facility agreement between Afreximbank and a $250 million loan agreement from a syndication of banks to finance capital and growth-related expenditures in the 2022 budget.

According to the government, the loan is critical to fixing the economy in the short term before a bailout can be agreed upon with the International Monetary Fund (IMF).

Meanwhile, it appears the government may get $750 million after the minority softens its stance.

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