The government's proposal for the Finance Committee of Parliament to approve a $1 billion credit arrangement has been postponed.
In order to finance Capital and Growth-related expenditures in the 2022 budget, the Finance Ministry is asking Parliament's permission for a 750 million loan facility agreement between AfreximBank and a 250 million loan agreement from a syndicate of banks.
According to the administration, the loan is essential to short-term economic recovery until a rescue deal with the IMF can be reached (IMF). The administration hasn't said how the money would be utilised, 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 utilised.
We can't grant you general consent for chop chop since they haven't told us what they want to do with the money, he added.
He also emphasised the basic flaw in the material that was presented to the committee.
He stated that this is so because "in one breath, we were asked to authorise a loan of 750 million, but what is in the memorandum to Parliament and what is in the loan agreement has some variations. We contacted to express our concerns about the competency of the folks who supplied the paperwork to us because the agreement contains two legs, tranches A and B, one of which is in euros and the other in dollars.
The government's "insatiable hunger for borrowing must cease," he continued.
According to Dr. Forson, the government does not follow orders from the IMF, which is a foreign partner. Instead, we just follow their advise, which may be accepted or rejected based on the current situation.
"What they are asking us to do and what is in the budget are two whole different things. Why do you want us to authorise $1 billion when your own budget states that they would be obtaining a term loan of $750 million over the course of the year, he questioned.
He stated that the government should update the budget through the mid-year review to reflect the loan sought before contemplating a loan that is greater than $750 million.