Ghana Parliament urged to approve $300m IDA loan

ParliamentThe Finance Committee of Parliament has urged the House to approve a $300 million facility from the International Development Association (IDA), which is expected to provide general budgetary support.

The committee in its report on the facility urged the House to adopt the report and approve by resolution, the Economic Governance and Poverty Reduction Credit as it was “highly concessional” and was being contracted to support a programme that would be beneficial to the nation’s development needs.

The report was laid before the House by the chairman of the committee, Mr. James Klutse Avedzi, to enable members to debate the motion that the House adopts the report of the committee on the agreement between the government of Ghana and the IDA for the facility.

“The purpose of the facility is to support government’s efforts to restore the budgetary discipline and tackle long standing public sector and energy issues, while protecting the poor,” the report said.

While some members from both sides of the House described the facility as good, members from the Minority expressed reservations about conditions tied to the facility and cautioned that the conditions would no doubt impose hardships on Ghanaians.

The MP for Sunyani West, Mr. Ignatius Baffour Awuah, said the freeze on public sector appointments would inflict hardships on Ghanaians since the sector remained the single major employer and called for a critical look at the package with the future of the youth in mind.

However, the MP for Tamale Central, Alhaji Inusah Fuseini, described the package as a good one that would help local farmers and also help reverse the economic imbalance imposed by the global financial crisis.

The loan which has a zero interest rate, has a grace period of 10 years with a repayment period of 25 years, excluding the grace period.

The facility, if approved, will be withdrawn in two equal instalments of $150 million each, and the first tranche’s release conditions set by the government of Ghana and agreed by the IDA, include inter alia that the government reconstitutes the Boards of the Volta River Authority (VRA), Electricity Company of Ghana (ECG), Tema Oil Refinery (TOR) and the Public Utilities Regulatory Commission (PURC).

Other conditions for the first tranche include the opening of a Treasury Single Account (TSA) at the Bank of Ghana and the identification of MDA accounts to be connected to the accounts as well as the implementation of a net hiring freeze in the public sector (excluding the absorption of trainees in education).

The report also mentioned other conditions as the increase in the number of households covered by the Livelihood Empowerment Against Poverty (LEAP) programme and also the commencement of regular publication of comprehensive and detailed quarterly fiscal out-turns with no more than one quarter lag.

For the release of the second tranche of he facility, conditions to be met include the submission by the government to Parliament a Freedom of Information Bill and if approved, the adoption of related implementation plan, including a budget for its implementation.

Other conditions are the appointment of “a minister of state to be responsible for Public Sector Reforms and to eliminate ghost workers from the Ghana Education Service (GES) payroll”; the revision of classification of pro-poor public expenditure based on an assessment of their effective impact on poverty for use in the 2010 budget; the completion by the government through the Ministry of Energy, consultations with stakeholders on an electricity sector financial recovery plan and the approval of the said plan through Cabinet.

The report said expected outcomes from the package included enforced net hiring freeze in the public sector, excluding trainees in education and health; reduced public subsidies to the operations of the energy sector as percentage of GDP and expansion in the number of regular LEAP beneficiaries.

It said some members had not been happy about the net hiring freeze condition since it would make it difficult for young graduates to join the public sector, the highest employer.

“The technical team however, explained to the committee that the net hiring freeze is only meant to ensure that MDA’s stay within their staff ceilings and that recruitments could be made to replace staff who would leave or retire,” the report noted.

Source: Daily Graphic

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