…as gov’t seeks US$620m
In recent times, Ghana has found itself at a crucial crossroad concerning its oil resources. The matter at hand revolves around a request by the Ghana National Petroleum Corporation (GNPC) to secure a substantial loan of US$620 million from external sources without the requisite parliamentary approval. This alarming development has triggered concerns about transparency, legality, and the prudent management of Ghana’s oil wealth.
The Parliamentary standpoint
In August, just before Parliament’s recess, the Parliamentary Select Committee on Mines and Energy, headed by Mr Atta Akyea, submitted the committee’s report on the 2023 work program of the Ghana National Petroleum Corporation. The report highlighted a significant issue: GNPC’s request for a US$620 million loan from the Tasco, a move necessitating parliamentary approval.
Parliament, in its wisdom and mandate, denied the approval of this loan as it did not align with the country’s interests and financial stability. Parliament firmly directed GNPC to negotiate the terms and conditions of the loan agreement and submit it for parliamentary review, as mandated by Article 181 of the Ghanaian Constitution.
The unlawful move
Disturbingly, it has come to light that the Presidency is purportedly pressuring GNPC to proceed with this loan agreement without obtaining the crucial parliamentary approval. This represents a direct violation of the explicit directive and resolution set by the Parliament. The intercepted memo from the boards of GMPC dated September 14th clearly states the Presidency’s coercion to secure the loan without the required parliamentary consent.
The IMF conditionality
The International Monetary Fund (IMF) Conditionality is a set of requirements and guidelines imposed by the IMF on borrowing countries as a condition for granting financial assistance or loans. These conditions are aimed at promoting economic stability, fiscal responsibility, and sustainable growth within the borrowing nation.
In the case of Ghana, the IMF has set specific conditions related to external debt. The IMF defines and enforces cumulative ceilings, which represent the maximum allowable limit on the total amount of external debt that the central government and public entities of Ghana can contract or guarantee. These ceilings are established for specific time periods, usually on a quarterly basis.
As of the latest available data recorded in March 2024, the cumulative ceiling for Ghana’s external debt stood at 84.7 million U.S. dollars. This figure signifies the upper limit that the government and its affiliated entities can incur in terms of external debt up to that point in time without violating the conditions set by the IMF.
Adhering to these IMF-imposed ceilings is critical for Ghana to maintain its financial discipline and avoid overburdening itself with excessive external debt. Failure to comply with these conditions not only risks economic stability but also undermines the country’s standing with international financial institutions and may impact its ability to secure future financial support. Thus, it is imperative for the Ghanaian government to manage its financial affairs within the established IMF conditionality to ensure long-term fiscal health and sustainable economic growth.
Conclusion
Ghanaians are increasingly concerned about this situation and are demanding transparency, legality, and accountability in the management of the nation’s oil resources. It is imperative that all stakeholders, including the press, civil society, and well-meaning unions, rise against this apparent disregard for due process and legality.
The potential ramifications of mishandling Ghana’s oil resources are profound and far-reaching. The current government’s actions, seemingly driven by short-term financial gains, risk jeopardizing the nation’s economic stability and future generations.
It is crucial for all Ghanaians to stand united in demanding responsible governance and judicious use of the country’s oil wealth. Only through collective action and a strong commitment to upholding the rule of law can we ensure that Ghana’s oil resources benefit the nation as a whole, both today and in the years to come.
The writer is an Economic Policy & Financial Analyst
(Reference: John Jinapor)
