The Resident Representative of the International Monetary Fund (IMF) in Ghana, Natalia Koliadina, has stated that she has forwarded a petition filed at her office by the Minority in parliament, seeking clarification from the Bretton Wood institution on the US$2 billion barter agreement between the government of Ghana and China’s Sinohydro Group Limited, to the IMF’s Washington D.C. Headquarters for determination during the upcoming review mission under the Extended Credit Facility.
In a letter dated 30 August 2018, addressed to Ranking Member of the Finance Committee of Parliament, Cassiel Ato Forson, and copied to Finance Minister Ken Ofori-Atta and Chairman of the Finance Committee of Parliament; Ms Koliadina, said: “Given the complexity of the transaction, I am unable to answer your question immediately”.
She emphasised that the IMF “will use the definition of government debt in the Technical Memorandum of Understanding, which has not changed since the inception of the programme”, to make a determination on the matter.
The Minority had wanted the view of the IMF as to whether the $2billion-for-bauxite agreement should be classified as a loan which could be added to the debt stock.
Per the agreement, Ghana will exchange refined bauxite with US$2 billion worth of infrastructure from the Chinese firm.
Minister of Finance, Ken Ofori-Atta, in his presentation of the Mid-year Budget Review on the floor of Parliament of Ghana on Thursday, 19 July 2018, stated that the Sinohydro transaction is a barter. However, the Minority think otherwise.
“We, the Minority, have carefully studied the provisions and terms of the so-called barter transaction, as officially tabled and passed by Parliament, and have identified a number of legal and technical issues that explicitly make the transaction a loan.
“Thus, as was argued during the parliamentary debate on the transaction, it is the Minority’s opinion that the value of the transaction be added to the debt stock.
“The Minority in parliament would, therefore, like to seek a clarification on this from the International Monetary Fund (IMF),” the petition signed by Mr Forson, and backed by Haruna Iddrisu, Minority Leader in Parliament, stated.
The Minority is of the view that “the terms of the barter agreement contained in the joint memorandum to parliament, are totally inconsistent with, and contradict the position of the Finance Minister that the agreement is not a loan agreement and will not add to the public debt stock”.
The Minority believe Mr Ofori-Atta “will be engaging in an act of gross illegality if he attempts to push this through and we are convinced that Sinohydro—a company that is not new to the terms of our Constitution and terms for borrowing—and the Chinese authorities, will tread cautiously in entering into this agreement”.
They also argued that any revenue from bauxite is state revenue, and therefore, should be captured as part of government revenues.
“Similarly, the expenditure on roads, railways, etc., using the bauxite revenue, are government expenditures and should be captured as such. We are of the view, therefore, that the above transaction should be included in assessing the government’s fiscal position at any given point in time,” the petition added.
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