In a significant parliamentary session, the Ghanaian Parliament has finally approved a substantial $300 million loan agreement with the World Bank, aimed at bolstering the country’s First Resilient Recovery Development Policy Financing.
This decision comes after initial resistance from the Minority, highlighting concerns over the government’s fiscal strategies.
The approved financing is part of a strategic engagement with the World Bank, intended to enhance Ghana’s crisis response capabilities and resilience.
This first tranche is one of three equal parts totaling $900 million, specifically designed to restore fiscal sustainability, foster financial sector stability, stimulate private sector development, improve energy sector financial discipline, and reinforce social and climate resilience across the nation.
Additionally, the government is seeking an extra $150 million for the ongoing Greater Accra Resilient and Integrated Development (GARID) Project, focusing on mitigating flood risks and enhancing solid waste management in the Odaw River basin.
The World Bank Loan Parliament approved is also aimed to elevate access to basic infrastructure and services in low-income, flood-prone areas within the Greater Accra region.
The initial rejection of the World Bank Loan by the Minority was based on their recommendation for the government to reconsider tax waiver proposals for companies engaged in the One District One Factory policy, advocating for the generation of funds internally instead.
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In response, Finance Minister Mohammed Amin Adam committed to reassessing the tax exemptions and promised to return to Parliament with a report in two weeks.
“I will rationalise it, review it, and report back to Parliament,” Adam stated, aiming to gain the Minority’s support through this review process.
During the parliamentary debate, Minister Adam took the opportunity to clarify several aspects of the World Bank loan agreement to the legislators.
He emphasized that the facility was a concessional loan from the World Bank, not an IMF facility, highlighting its favorable terms, including a 25-year repayment period, a five-year grace period, a low-interest rate of about 1.25 percent, and a grant element of 26 percent.
“This is a budget support…part of the financing for the 2024 budget,” Adam explained, asserting the significance of the World loan in achieving the objectives outlined in the budget approved by the same Parliament.
The approval marks a critical step toward implementing various projects and programs planned for the upcoming year, demonstrating a collective effort to address Ghana’s financial and developmental challenges amidst initial partisan differences.
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