Ghana’s debt to Gross Domestic Product (GDP) is estimated to be pegged 130 percent, all things being equal, if the China loan of US$15 billion is approved by the Parliament.
This situation will be risky and damning to the economy of Ghana, for the fact that, the country will exceed far in excess over 60 percent of the International Monetary Fund threshold of debt to GDP of 70 percent. This will worsen the credit worthiness of the country.   
However, as the debate rages on over the government plans to secure a US$15 billion loan from China, Hon Isaac Adongo, has lambasted Vice President Bawumia’s justification labeling the move as “frightening, scary and reckless.”
He added that, particularly when he, Dr. Bawumia, criticized the Mahama government for contracting a much lesser amount.
According to him, the situation will worsen Ghana’s debt status which could seriously affect the country’s economic growth and development.
The National Democratic Congress (NDC) Member of Parliament for Bolgatanga Central commenting on the government’s plan chastised the Vice President for spearheading the agreement to contract the loan from the Asian country.
“We are dealing with a country where borrowing US$1bn of Eurobond was described by Bawumia himself as very reckless borrowing and he put in perspective the GDP ratio when we were borrowing just US$1bn. In the 2017 budget by this government, the debt to GDP of 72% was vilified as the worst this country could ever have, now to add US$19bn of an additional loan in such a short period will push our debt to GDP to the region of 120% and 130% of GDP. That is the worst that you can find in the world,” he said.
“For a person like Bawumia to now be saying that we should be clapping for him for ditching us into 130% debt to GDP is frightening, scary and reckless,” he noted.
Similarly, in registering its uneasiness, the Integrated Social Development Center (ISODEC) has warned that Ghana risks losing more than it will benefit from the newly announced US$15 billion partnership with the Chinese government.

Dr. Mahamudu Bawumia revealed recently after a four-day visit to China, that the Nana Addo-led government is partnering its counterpart in China for the implementation of the economic transformation agenda.

The funding partnership with China, Dr. Bawumia explained, is not based on the traditional model of borrowing and aid. The new model, he noted, is based on the bargaining power of the country’s natural resources such the 2.8 billion metric tonnes of iron ore deposits, 960 million metric tonnes of bauxite, 413 million metric tonnes of Manganese and not to mention Gold and Cocoa.

But the announcement of the US$15 billion partnership has sparked a massive reaction from a section of the public. The Campaign Coordinator of ISODEC Dr Steve Manteaw told an Accra based media firm that the cost of the deal far outweighs the benefits.

“If you look at the IMF projections we are not really right in term of the outlook for the commodity sizes…and so to go in at this time to mortgage your natural resources for me is a risk that if we avoided will be better for Ghana.

“There is a lot to be considered in terms of what the benefit and the cost of this transaction…for me I think the cost outweigh the benefit.”

But the Director of the Centre for Asian Studies, University of Ghana, Dr. Lloyd Amoah has downplayed the doubts surrounding Ghana’s latest partnership with China.

“The resources, the new ideas in many ways has more or less shifted to the Asian region… China is stable, and that is what we want for a country like ours that is broke, backward and virtually on its knees, that is how we should think about this instead of this fear and doubt and skepticism.”
 
Meanwhile, Dr Joe Abbey, an economist, is pushing for parliamentary scrutiny for the $15 billion package from China to ensure that the country actually secures the facility.

Dr. Abbey’s call has been influenced by the country’s inability to secure the entire US$3 billion China Development Bank loan.

There were reports that facility was frozen because the Chinese government wanted Ghana to use its crude oil as collateral, which was not in original agreement.

Government is seeking to leverage Ghana’s natural resources, specifically bauxite, through its recent partnership with the Chinese government that saw the latter pledge to commit over $15 billion to Ghana’s economy.

According to the Economic Adviser to the Vice President, Dr. Gideon Boako, government through the agreement will construct bauxite refineries, which will generate enough income to settle the loan.

“Ghana told the government of China that we are not coming here for loans. We also told them since our tax revenues are not quite enough to be able to raise the kind of money in the short-term, we want to form a strategic alliance with China and they agreed.

“We told them we have a lot of mineral resources so we want to build the railways along the lines of the mineral resources so that we can cart the bauxite and everything,” he said.

He further explained that “if we are able to get the bauxite out of the ground and we refine the bauxite, that alone is going to generate an export value around 460 billion dollars.”

The $15 billion package according to the Vice President Dr Mahamadu Bawumia includes the remaining the US$2 billion CBD loan.

But renowned economist Dr Joe Abbey told JOYBUSINESS it’s critical that the scrutiny is done by Parliament for Ghanaians to know the real cost the economy.

Dr Joe Abbey has, however, downplayed any negative impact of the Chinese financial package to Ghana on the public debt stock.

There are fears that this could quadruple the debt stock, which has reached $127 billion as at April this year. This, the Economist believes the facility was arraigned in a way that would not inflate the public debt.
Source: Adnan Adams Mohammed
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