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IMF ‘agrees’ with Ghana on $3b Chinese loan

The International Monetary Fund (IMF) has agreed on the $3 billion Chinese loan secured by the Ghana government to finance critical infrastructure development in the country especially in the oil and gas sector.

“The government has secured a large financing package on non-concessional terms to finance critical infrastructure investments, some of which are expected to be self-financing. The mission agreed with the government on the importance of infrastructure investment to boost Ghana’s growth potential and economic development,” said the IMF in a statement October 25, 2011 after conducting discussions for the fifth review of Ghana’s economic programme under the IMF’s Extended Credit Facility (ECF).

The IMF Mission led by Christina Daseking visited Accra during October 12–25, 2011 and did their assessment on Ghana’s economy. The team met with Ghanaian authorities including President John Evans Atta Mills, Finance Minister Kwabena Duffuor, Bank of Ghana Governor, Kwesi Amissah-Arthur as well as other senior officials, members of parliament, and representatives from the private sector, academia, and civil society.

According to the Fund, discussions focused on the appropriate evaluation and phasing of investment projects and on supportive revenue and expenditure measures to create the space for larger capital spending, while preserving macroeconomic stability and the sustainability of public debt.

“This is particularly important in light of the prospective decline in Ghana’s access to concessional financing reflecting its new middle-income status,” the IMF added.

Christina Daseking said “Plans for a significant scaling up of infrastructure investment call for new revenue measures and restraint in other spending areas in the 2012 budget.”

Parliament approved the $3 billion loan, which would be used on a number of projects such as a gas processing facility, gas transmission pipelines, the building of railways and trunk roads

But the Minority New Patriotic Party (NPP) who abstained during the approval in Parliament said government would be short-changed if it goes ahead with the agreement.

The IMF was positive on Ghana’s economic outlook fueled by oil production.

Boosted further by the start of oil production, the IMF says Ghana’s overall economic growth is projected to reach 13.5% this year and more than 8% in 2012, with average inflation expected to remain broadly unchanged at a rate of 8.5-9%.

“The main risks to the generally favourable outlook arise from possible adverse developments in world commodity prices and foreign investment inflows, and from public spending pressures ahead of the 2012 elections,” it added.

By Ekow Quandzie

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