The Government of Ghana $1 billion from some international banks for budget purposes and to boost the Central Bank reserves as the country seeks to cut its fiscal deficit and stabilise the cedi.
Details of the loan is yet to be laid before Parliament is actually a US$2Billion syndicated loan with the first billion now being made available while the rest comes later in the year.
According to a Bloomberg report sighted by GhanaWeb, Ghana raised $750 million through syndicated loans with the participation of about eight African and European banks and $250 million from multilateral lenders.
Standard Bank Group Ltd., Standard Chartered Plc and Rand Merchant Bank Ltd. led the arrangements, the report added.
Ghana cut its budget shortfall to 7.4% of gross domestic product in 2022, from an estimated 12.1% of GDP and will dedicate $750 million of the syndicated loans to the budget, for expenses and liability management.
The rest will go to the Bank of Ghana to beef up its resources for swap deals.
“Ghana’s debt ratio rose to 78% of GDP at the end of March, from 66.3% of GDP a year before. The cedi lost 22% against the dollar this year, compared with 1% appreciation for the same period a year ago.
“The country will consider the second tranche of $1 billion in the latter part of the year, after the mid-year review of the budget and taking into account the impact of the electronic transactions levy, oil and food prices, as well as geopolitics,” the report stated further.
It is not right to land Ghana in more debt just to balance the budget or build reserves. Our country will be in hock to foreign lenders (look at Sri Lanka) and our future generations will pay the price. They will not forgive us.
It makes no fiscal sense to build reserves (no interest) using money on which you will be paying interest.