Ghana Parliament Approves $750 Million Loan From African Export-Import Bank For Infrastructural Projects

Ghana Parliament Approves $750 Million Loan From African Export-Import Bank For Infrastructural Projects

  • The African Export-Import Bank has agreed to lend the Ghanaian government up to $750 million for the 2022 fiscal year
  • The loan is part of a move by the government to complete various infrastructural projects across the country like the Ofankor Nsawam road and Ejisu Konongo road, among others
  • The loan is the first instalment of a $1 billion loan portfolio that the government is looking at taking to complete the construction projects

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Ghana's parliament has authorized an agreement for a $750 million loan from the Afrexim Bank to support the nation's budget and finance infrastructure projects.

Parliament of Ghana
Parliament of Ghana. Photo credit: Citi Newsroom. Source: UGC
Source: UGC

The loan revenues are anticipated to free up space for Ghana to cut domestic borrowing and put it in a better position to sustain the local currency, which has underperformed in Africa by 25.6 per cent against the dollar this year.

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The Minority, which had previously rejected the loan arrangement, changed its position during the debate to prevent what they fear will be the economic collapse of the nation if the loan was not granted.

The 2022 Budget Statement and Economic Policy of Government both said that the government intended to use a syndicated term loan facility to borrow up to the equivalent of $750 million in Ghanaian cedis to implement the 2022 budget.

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The $750 million load will cover projects like:

  • Ofankor-Nsawam road ($200 million)
  • Ejisu-Konongo road ($75 million)
  • Nsawam-Apedwo road ($10 million)
  • Suame Interchange ($47 million)
  • Flower Pot Interchange ($35 million)
  • Sofoline Interchange ($35 million)

Ghana turned around to look for a loan from the International Monetary Fund earlier this month after a decision to cut budget expenditure earlier this year by as much as 30%.

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The impact of the coronavirus pandemic, energy sector loans, a thorough clean-up of the banking industry, and the effect of Russia's invasion of Ukraine were the main causes of Ghana's recent debt woes. This increased the country's debt ratio to 78 per cent of gross domestic product at the end of March from 62.5 per cent five years earlier.

The nation expects to get around $1.5 billion access from the IMF program to improve the domestic measures it is currently putting into place.

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