Parliament yesterday approved a credit facility agreement between the government and VTB Capital plc, London for an amount of US $300million for the Ghana Armed Forces (GAF ) peacekeeping efforts undertaken by the United Nations Organization in Mali, South Sudan and other places.
Proceeds of the loan would be used to re-equip the GAF to enable them provide equipment, logistics and transport support for emergency operations overseas
Moving the motion for adoption of a report Finance committee on the facility, Chairman of the Committee, James Avedzi informed members that the facility, it was noted, has a repayment period of three years, a grace period of two years, a maturity period of five years, an interest rate of six months, upfront fee of 1.85 percent, a management fee of two percent at drawdown and a default rate of two percent.
He said the urgency of the facility emanates from the development timelines given by the UN for Troops Contributing Countries (TCCs) to deploy in South Sudan and Mail.
"TCCs are to suffer a deduction of the Troop Cost reimbursement of dysfunction or unserviceable Contingent Owned Equipment (COE) in the Mission areas. This policy is to take effect from 1st July 2014 and the deadline for deployment is 1st April 2014. This means Ghana is behind time for deployment and if Ghana fails to meet the deadline, the country would lose the position to other countries," he said.
He said the committee observed that the entire facility is expected to be paid with proceeds from reimbursement to the GAF from the UN adding that an amount of US $446,484,693.05 is to be received as proceeds from the GAF peacekeeping operations between 2014 and 2018.
On issues of due diligence, he said, the Bank of Ghana through its treasury department reported that VTB Capital is an investment business with a net worth of US$ 710 million and a total asserts of US$8.1 million as at 20012.
He said the agreement has been with the committee for four months and they have done a thorough job on it, insisting due diligence has been done.
He explained that loan agreement is just a pre-financing facility to fund military equipment under the United Nations Peace Keeping programme.
He pointed out that the country will spend $300million on the military equipment and will be paid an amount of $446 million in return by the United Nations, adding a profit of over $100 million will be made from the arrangement.
"The committee has carefully examined the referral and realised the urgent need for Ghana to participate in emergency UN peacekeeping operations in South Sudan and Mali and is convinced that the facility would enable Ghana to achieve her objective by supporting troops. " he said
He pointed out that members of the minority side of the committee did not support the recommendations for the approval of the facility as presented to the House on the grounds that the due diligence report from the Bank of Ghana does not adequately address their concerns.
The Foreign and Defence Ministers, Hannah Tetteh and Mark Woyongo respectively who also contributed to the motion, spoke in defence for the loan.
Hannah Tetteh on her part noted that "some people do not want soldiers to be equipped" and urged her colleagues to "act responsibly to equip the military."
Dr Mark Assibey Yeboah, member of the committee in a contribution said "The cost of borrowing does not make any sense under current international credit conditions adding that the country is confronted with upfront fees of $5.5 million and management fees of $6million".
He expressed concerns over management fees being charged by the lenders for managing their own portfolios.
"If you put the two together [upfront and management fees] that is $11.5million. Without mincing words that is chop money for somebody and his friends," he said.
Other members of the minority also raised questions about the terms of the facility particularly the interest rate of 5 million dollars government has agreed to pay the facilitator of the loan.
Source: ISD (Gilbert Ankrah)