NewsWest AfricaMurky loan contract as Ghana's public debt snowballs


Posted on Thursday, 17 July 2014 10:24

Murky loan contract as Ghana's public debt snowballs

By Billie McTernan in Accra

Ghana's parliament has been dragging its feet in approving a $300 million loan from Russia amid indications the country's public debt continues to snowball.

In July the Bank of Ghana revealed that the country racked up a public debt – external and public – of 58.4 billion cedis at the end of March.

The total amount is up from 52.1 billion cedis in December 2013 and accounts for 55.4 percent of the gross domestic product.

Compensation of employees – mostly comprised of wages and salaries which has been identified as the biggest contributor to the government's budget deficit which at 4.1 billion cedis is lower than the target of 4.4 billion.

However, as a result of reduced revenues, the amount is 47 percent of domestic revenues.

Last year's compensation of employees for the same period was 44.1 percent.

Meanwhile, in parliament the passing of a $300 millin that would go towards logistics and the provision of equipment for the Ghana Armed Force's peacekeeping troops in Mali and Sudan is once again under review.

The loan, proposed to be issued by Russian investment bank VTB Capital, has been on the table since March, when the ministry of Defence presented its case to parliament.

The minority called for thorough due diligence on the conditions of the loan when it was first proposed.

A point contention was that the terms of the loan stated that the facilitator will earn $5 million but will not be held responsible should anything go wrong.

The minority argue that few changes have been made to the agreement.

Most of the majority insists that the loan is necessary to ensure the upkeep of the Ghanaian troops on peacekeeping missions.

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