The government’s proposal for the Finance Committee of Parliament to approve a $1 billion loan agreement has been deferred.
The Finance Ministry is asking Parliament to approve a 750 million dollar loan facility arrangement between AfreximBank and a syndicate of banks to finance Capital and Growth-related expenditures in the 2022 budget.
According to the government, the loan is essential to short-term economic recovery until a rescue deal with the IMF can be reached.
The administration hasn’t said how the money would be utilized, therefore the minority members of the finance committee have rejected the request.
Dr. Cassiel Ato Forson, the ranking member of the finance committee, said in a statement to the media on Thursday that in order for the committee to make an informed choice, the administration must offer detailed evidence on how the funds would be used.
“They have not told us what they want to use the proceeds for so we cannot give you blanket approval for chop chop,” he said.
Furthermore, he called attention to a serious flaw in the document that had been presented to the committee.
He explained that this is due to “What is in the memorandum to Parliament and what is in the loan agreement has some differences –in one breath, we were called upon to approve a loan of 750 million but what is in the agreement has two legs tranche A and B, one is in euros and one in dollars so that will mean that Parliament will have to amend what was brought to us so we called to question the competence of the people that sent the document to us.”
“The government’s insatiable appetite for borrowing must stop,” he continued.
According to Dr. Forson, the government does not follow orders from the IMF, which is a foreign partner. Instead, we take “advice from them which can be accepted or rejected depending on the circumstances of the day.”
“What is in the budget is completely different from what they are asking us to do. The budget is saying that in the course of the year, they will be taking a term loan of $750 million so why do you ask us to approve $1 billion when your own budget says 750 ,” he questioned.
Before taking into account a loan in excess of $750 million, he noted, the government should amend the budget through the mid-year review to reflect for the loan requested.