- The IMF has expressed concerns about Ghana's $2 billion deal with China's Sinohydro
- The IMF explained that some portions of the agreement may place limitations on Ghana's use of its own resources
The International Monetary Fund (IMF) has expressed concerns about Ghana’s $2 billion infrastructure for bauxite deal with China’s Sinohydro.
Per the agreement, the Ghana Integrated Aluminum Development Corporation (GIADC) is required to set up an offshore escrow account for revenue generated from selling bauxite.
YEN.com.gh understands that this is meant to help secure GIADC’s repayments to Sinohydro with the provision that the funds will be for the exclusive benefit of Sinohydro.
According to a 3news.com report, at any time during the term, the escrow account is required to have amounts sufficient to cover the upcoming two installments, from the start of construction onward.
This, the IMF 7th and 8th review report of the Extended Credit Facility (ECF) for Ghana says, will put a limitation on how government can exercise discretion over using its own resources.
The IMF is of the opinion that committing future bauxite receivables to debt service and locking bauxite sales receipts in the escrow account limits the Ghana’s ability to exercise discretion of how the proceeds are allocated.
Even though the agreement said all financial obligations to Sinohydro will be transferred from the ministry of finance to GIADC, at which point government will have no financial liability to Sinohydro, nor will it provide any guarantees, the IMF believes the possibility of government carrying the burden of GIADC exists, if it is unable to fulfil its financial obligations to Sinohydro.
However, President Nana Addo Dankwa Akufo-Addo, in April 2019, cut the sod for construction of the Tamale Interchange, to mark the start of work under the agreement that was approved by parliament in July 2018.
A total of 442 kilometres of roads will be constructed under the first phase of the agreement at a cost of US$646million.
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