Chinese loans not for individual benefit, says Veep

Ghana’s Vice President Dr. Mahamudu Bawumia says expected loans from China is going to be used for what is intended and not shared among friends or private companies.

Government is expected to receive an amount of 15 billion dollars from the communist country to support different sectors of the economy, including education and road infrastructure. The state is expected to leverage on its bauxite to secure the loan, and will be subject to parliamentary deliberations and subsequent approval, or otherwise.

Though the money is yet to arrive in the state kitty, the minority in parliament has expressed strong reservation about it, insisting the money will add to the existing debt stock. The group is also questioning the rationale behind government’s decision to exchange a portion of the nation’s bauxite for the loan.

NDC MP for Bolgatanga Central Isaac Adongo, who described the agreement with China as “reckless,” said: We are dealing with a country where borrowing $1bn of Eurobond was described by Bawumia himself as very reckless borrowing and he put in perspective the GDP ratio when we were borrowing just $1bn. In the 2017 budget by this government, the debt to GDP of 72% was vilified as the worst this country could ever have, now to add $19bn of an additional loan in such a short period will push our debt to GDP to the region of 120% and 130% of GDP. That is the worst that you can find in the world,”

He said for a person like Bawumia to now be saying that we should be clapping for him for ditching us into 130% debt to GDP is frightening, scary and reckless.

But speaking on the issue on Tuesday at the Flag staff House, Dr. Bawumia strongly denied the agreement will add to the debt stock, as it stands now. Rather, according to him, the arrangement does not add nothing to the debt, because the country’s mineral is what will be used to source the loan.

“We have been used to the old order of borrowing from china,” he said. “What we are proposing and the agreements we have reached so far are not new loans, but we are using this small fraction of 5 percent not for the benefit of an individual or company, but the entire nation.”

Dr. Bawumia said 2 billion dollars of the expected amount will go into the One District One Factory project, and portions of the money will be invested in education, including modernizing more than 40 Senior High Schools in the country. He also added that, places like Sofoline, Danquah Circle and Tamale will have their share of the money.