Former president John Dramani Mahama has made it quite clear in a speech at GIMPA this afternoon, that the National Democratic Congress (NDC) and the Minority in Parliament will oppose and vote against a $1 billion syndicated loan brought to Parliament for consideration.
Speaking at the forum held at GIMPA on the Economy during the inaugural launch of Think Progress Ghana in Accra, His Excellency John Dramani Mahama remarks on the current economic situations confronting the country, a reason he promised to lunch a crusade against the loan.
The following are the reasons for this position.
The loan made up of a $250 million component from a consortium of Banks comprising Standard Chartered Bank, Rand Merchant Bank and Standard Bank of South Africa and a $750 million component from the AFRIEXIM Bank, will have grave implications for our economy if approved.
The term sheet for this loan has the following features.
• To begin with, it will add a colossal GH¢ 8 billion to our public debt in one fell swoop.
• The cost of insurance alone for the $250 million component is $ 40.625 million.
• Total interest payable and other costs on this $250 million, five-year tenor loan,amounts to $ 86.85 million.
• The total cost therefore for borrowing the $250 million component amounts to $127.50 million.
• For the $750 million component, interest payment and other costs excluding insurance premium and or collateral, come up to $383 million over its seven-year tenor.
• Put together, the $1 billion loan agreement will cost the taxpayer $351 million in interest and other charges.
• The repayment schedules of both components mean that this government will be saddling the new government that replaces it with an additional $1.438 billion to pay within five to seven years starting from the first quarter of 2025.
• Added to the total of $2.775 billion in 2025 and 2026 Eurobonds, the next government will have to cough up over $3 billion or, at the current exchange rate, GHS 24 billion,within 15 months of taking office just to retire and service four loan items.
• The $3 billion needed for this will virtually wipe out our net international reserves which will seriously undermine the economy.
• In the four years between 2025 and 2029, $ 3.7 billion or approximately GHS 30 billion will be required to retire maturing Eurobonds alone.
• This will be in addition to the tens of billions of cedis in debt service payment for other loans that will have to be paid from 2025.