BoG lose $6bn in reserves; nation’s reserves now at $3bn – Finance Committee Report
The Bank of Ghana’s foreign reserves has dwindled from $9 billion to about $3 billion.
This is per a recent report by the Finance Committee of Parliament.
The Finance Committee of Parliament made the disclosure in its approval for a $750m loan facility from the AfreximBank.
Per the Committee report laid before Parliament and adopted by the House, the Finance Minister Ken Ofori-Atta explained to the House that the country needed this loan amount to shore up the reserve position of the Central Bank else the country risks moving into insolvency and defaulting on its international commitments.
“These challenges are further exacerbated by the rapidly dwindling reserves of the Bank of Ghana which has declined from $9 billion to about $3 billion. With a monthly demand of over $600 million, the reserves of the central bank may be exhausted in a few months if urgent steps are not taken to shore up the countries reserves.”
“The Minister further indicated that, there is an urgent need for the government to secure the $750 million facility to help shore up the reserve position of the Bank of Ghana to avoid the country defaulting on its international commitments and also to avoid the country moving into insolvency,” read parts of the report.
The Committee report mentions 11 projects the loan amount will be used to finance including the Ofankor – Nsawam road, the Suame Interchange and local road network project as well as the completion of the flower pot interchange.
Parliament has since approved the loan agreement between the government and the AfreximBank.
Excerpts from the report
Parliament approves $750m loan facility request by Finance Ministry
Parliament on Wednesday, approved a $750 million loan requested by the Finance Ministry.
This was after the Chairman of the Finance Committee, Kwaku Kwarteng laid the motion for approval.
According to him, the loan will help the government raise the needed funds to complete the infrastructural projects in the 2022 budget.
“Mr. Speaker having carefully examined the agreement which forms part of government’s programme aimed at raising funds for infrastructural projects in the 2022 budget, I will accordingly urge this House to approve this facility in order that Ghanaians may reap the benefits the facility will bring.”
His move was seconded by the Vice Chairman of the Committee, Patrick Boamah.
However, the Ranking Member on the Committee, Cassiel Ato Forson expressed worry about the country’s debt levels.
According to him, all the tax revenues accrued from the first quarter of the year were consumed by interest payment and amortization for the same period.
He revealed that GHS 12.9 billion that was raised in the period could not offset interest payments and amortization payments of the same period.
“Mr. Speaker let me put on record that I had serious concerns with Ghana’s debt sustainability issues. Mr. Speaker currently, per the data from the Ministry of Finance published on its website it is clear that in the first quarter, Ghana recorded a total tax revenue of GHS12.9 billion. Of this amount, debt service obligations alone made up of interest payment and amortization GHS13.9 billion.”
Mr. Speaker, this simply means that the total tax revenue is not enough to service Ghana’s debt,” he insisted.
Meanwhile, approval was opposed by some Minority MPs.
Edward Bawa, the Bongo lawmaker argued that the House did not have the quorum at the time the loan was approved.
What will the loan be used for?
Government has informed Parliament that the $750 million will be used for the projects below:
- Suame Roads
- Sofoline interchange
- Flower pot interchange
- All African Games infrastructure
