Parliament has approved a $300 million loan to finance the first Resilient Recovery Development Policy Financing, despite stiff opposition from the Minority Caucus.
The loan facility aims to restore macroeconomic stability, and debt sustainability, and to support inclusive growth while protecting the poor and vulnerable. It also targets strengthening monetary and exchange rate policies to lower inflation and restore external buffers. Among others, it also seeks to restore fiscal sustainability, support financial sector stability and private sector development, improve energy sector financial discipline, and enhance social and climate resilience.
The concessional financing agreement, between the Government of Ghana and the International Development Association (IDA) of the World Bank Group, features a grant element of 26 per cent, a repayment period of 25 years, and a five-year grace period.
Presenting the report of the Finance Committee on the agreement on Friday, March 8, 2024, Kwaku Kwarteng, Chairman of the Committee noted that the loan constitutes the first tranche of the World Bank’s $900 million programmatic Development Policy Operation (DPO) series for the Financial Year 2023-2025.
The report also stated that the $300 million facility is not allocated to any specific project in the 2024 budget.
However, the Minority opposed the deal and raised concerns about the tendency for excessive borrowing by the Akufo-Addo/Bawumia-led government.
The NDC MPs led by the Minority Leader, Dr Cassiel Ato Forson emphasized the need to enhance measures for maximizing domestic revenue. They strongly opposed numerous tax exemption applications currently under consideration by Parliament, citing them as potential sources for mobilizing domestic revenue.
According to the Minority, tax exemptions pending before the Finance Committee of Parliament total around GH¢5.5 billion, equivalent to $449 million in dollar terms. They expressed worries that these tax exemptions could amount to approximately GH¢12.5 billion, surpassing the GH¢11 billion targeted revenue from new taxes introduced in the 2024 budget.
In winding up the debate, the Finance Minister, Dr. Mohammed Amin Adam assured the House of his commitment to reviewing the tax exemption requests and reporting back to the House within two weeks.
“Mr Speaker, let me take this opportunity to clarify a few issues. First of all, this is not an IMF facility, it is a World Bank facility. It is a concessional facility for 25 years. The payment period has a grace period of five years interest of about 1.25 percent and it has a grand element of 26%.”
“It is concessional and this house is familiar with that concessional facilities. Secondly, it is a budget support. This same house approved the financing for the 2024 budget, a total financing of 61 billion. And this is one of the facilities that we are pursuing to finance the 2024 budget. And therefore as we already know, the 2024 budget, through this house, allocated resources to different projects and programmes for the year.
“I want to assure them [Minority] that I will take a look at these exemptions. I will rationalize it, I’ll review it and I’ll come back in two weeks to report to parliament and I hope that when I come Honourable Members will support me in whatever rationalization we are going to do,” he said.
