The US$750 million financial facility secured by the Government of Ghana from the African Export-Import Bank (Afreximbank) is expected to hit the Ministry of Finance’s account at the Bank of Ghana this week.
On July 20, 2022, Parliament approved the $750 million loan agreement between the government and Afreximbank.
The loan is expected to fund capital and growth-related spending in the 2022 budget. It will also give the local currency a big boost, helping to stabilize the cedi, which has come under serious depreciation rate pressure this month. this, in particular.
According to sources at Asaase News, Afreximbank’s board has approved the loan and that “the facility agreement has reached the final stage”.
A senior government official noted that “Afrieximbank has received board approval, a critical precondition (CP),” before disbursement.
“The Letter of Fee has been agreed and the final draft has been released. The signing of the facility will take place once the final draft is submitted by Afreximbank and approved by the Ministry of Finance (MOF),” the source said. .
With growing concerns over the fate of the cedi, news from Asaase followed the progress of injecting $750 million of foreign currency into the economy.
The signing of the credit facility is scheduled for Wednesday, August 17, “if the Ministry of Finance raises no objections”, an Asaase News source in Cairo added.
According to another source at the Ministry of Finance, “the escrow account forms have been completed and they would be signed on Monday August 15, 2022”.
Obviously, the disbursement, linked to the fulfillment of the conditions precedent, should be activated this week with a draw “from August 18”, the source further indicated.
The government cut budgeted expenditure by 30% and suspended the start of any new projects. What didn’t help were the low levels of income revenue and the sharp rise in inflation.
The economic difficulties have been biting, affecting businesses and families.
The government has, however, been praised in some quarters for its ability to keep our lights on and avoid shortages of essentials such as petroleum products.
Loan syndication approach
Given rising global interest rates and our macroeconomic situation, the government has made the decision not to issue Eurobonds in 2022 until market conditions improve.
The government has therefore planned in the 2022 budget to use the loan syndication approach to raise the necessary financial resources.
This approach meets two objectives: (1) allow the country to finance certain priority projects in the 2022 budget; and (2) provide the necessary foreign exchange to the Bank of Ghana to consolidate the bank’s reserve position and for foreign exchange management.
The proceeds of the loan would be widely used to finance projects in the road, energy, railway and health sectors. These projects are those outlined in the government’s 2022 budget and economic policy statement.
-Additional files from AsaaseNews