NewsWest AfricaGhana opposition seeks IMF view on $2 bln Chinese Bauxite deal

Mon,12Nov2018

Posted on Friday, 24 August 2018 14:28

Ghana opposition seeks IMF view on $2 bln Chinese Bauxite deal

By REUTERS

 President of Ghana Nana Akufo-Addo, briefs the media after a meeting at the chancellery in Berlin, Germany, Wednesday, Feb. 28, 2018. Photo: Markus Schreiber/AP/SIPAGhana's opposition in parliament wants the International Monetary Fund (IMF) to decide whether a $2 billion Chinese deal agreed by the government in exchange for bauxite will add to the country's debt burden, it said on Thursday.

Under the deal, approved by Ghanaian lawmakers last month, China's Sinohydro Corp Ltd will provide $2 billion for government road projects in exchange for refined bauxite exports.

President Nana Akufo-Addo is expected to visit China next week to finalise the deal, which the government has described as a barter deal and not a loan facility.

But minority leader in parliament Haruna Iddrisu told Reuters his side considers the deal to be a loan with implications for an already over-burdened taxpayer, and had written to seek the IMF's verdict.

Concerned about burden of additional borrowing

He said the decision to write to the IMF stemmed from past statements by the government that debt servicing costs were among the factors constraining Ghana's development programme.

"It is our strong belief that this Sinohydro deal is a loan which is coming to add to the debt stock and we are concerned about the burden of additional borrowing cost on the over-burdened taxpayer," Iddrisu said.

IMF Ghana chief Natalia Koliadina confirmed her office had received the letter. "We have received information from the parliamentary minority regarding the Ghana-China bauxite deal. We will need to have more information to determine the nature of the transaction," Koliadina said in email response to Reuters.

Ghana is in its final year of a $918 million credit deal agreed with the IMF in 2015 and must meet benchmarks including trimming its public debt to successfully exit in December.

Ratings agency Moody’s estimates that Ghana’s debt will rise above 70% of gross domestic product (GDP) by December, compared with 63.8% as of May, driven mainly by a decision by the government to finance the setting up of a new bank to acquire the assets of distressed lenders.

Ghana, which exports gold and cocoa, plans to build a bauxite refinery by the end of next year.

 



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