NPP tells NDC to learn from economic meltdown

Kyei-Mensah Bonsu
The Minority in Parliament has called on the government to learn from the bitter experiences of recent economic meltdown which was caused by investments in the housing sector and take a second look at the STX Housing deal.

It also suggested that if the government was bent on providing the security agencies with houses, it must immediately complete the 5,500 affordable houses initiated by the Kufuor Administration but were at various stages of completion.

Addressing a press conference in Accra the Minority Leader, Mr Osei-Kyei-Mensah Bonsu, noted that the government could achieve this by borrowing locally for the project and when completed all the building could be allocated to the security agencies and the areas declared as “security installations or barracks.”

He said the second option for the government was that it could send a bill to Parliament for the establishment of a “Security Services Housing Fund” and pay the over $100 needed to service the $ 1.5 billion loan every year for 20 years into the fund and use the funds to build houses for the security agencies.

He said with this, part could be built as houses anywhere that the personnel might choose and buy them at a subsidised interest rate so that they did not retire from the service into penury and homelessness.

Mr Kyei-Mensah Bonsu said with the above suggestions, Ghana would not mortgage itself to the Koreans as the STX deal sought to do, also “we will use local materials and employ 100 per cent Ghanaians”.

“Our men and women in uniform will get their houses in the barracks and elsewhere. Everyone will be happy and the government would have served Ghanaians better. These are alternatives,” he added.

He said if the government was bent on borrowing from the Koreans for the project at all cost, then President J.E.A. Mills should consider the delicate nature of the nation’s economy and scale down the loan from the Koreans to a manageable size and combined with the options which have been proposed.

The Minority leader advised President Mills to reserve the borrowing of such huge loans for projects that could pay for themselves such as the building of dams, constructing other energy generation, transmission and distribution facilities, processing of bauxite and other minerals.

He said apart from what happened to the USA economy regarding the economic meltdown due to the problems in the housing sector, the economies of the Asian Tigers including Korea wobbled seriously and almost collapsed.

He said the main cause was the overly huge investments these countries made in housing which was not commensurately paying back to the economy, resulting in many Chief Executives committing suicide and in Indonesia it ultimately led to the overthrow of President Suharto in 1998.

Mr Kyei-Mensah Bonsu gave another example of how in 2010, the economy of Dubai began to crumble due to its huge investments in housing, Dubai had to be bailed out by Abu Dhabi to the tune of $10 billion.

Talking about the impact on the local Ghanaian economy, he said this single transaction with the Koreans would increase the public debt/GDP ratio from about 60 per cent to over 90 per cent, while interest payments alone on the loan at 2 per cent per annum would amount to $ 450 million.

He added that in 2009, the entire domestic government investment expenditure for the country was GH¢260 million.

The single loan of $1.525 billion for a single project for one sector of the economy would be eight times the entire domestic government investment budget for all the 35 sectors of the economy.

“This single loan for one sector of the economy and for one project will be about 10 per cent of the GDP, thus bringing our public debt to about 71 per cent of GDP,” Mr Bonsu added.

He said having agreed to off-take 90,000 units of the houses, as well as provide sovereign guarantee, Ghana government in the same off-take agreement Clause 5 further agreed to provide all land designated as sites (”sites”) for the housing project “free from any al all encumbrances, free from claims or disputes of any nature at no cost to STX.

“Any and all infrastructure necessary for STX to freely access to sites and successfully execute the housing project, including but not limited to water, electricity, telephone, roads, sewerage, drainage.

An unconditional and irrevocable waiver of sovereign immunity with regard to any and all liabilities arising from and in connection with this agreement”.

Source: Daily Graphic

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