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Minority accuses government of “illegality”; insists Sinohydro deal is not barter

The National Democratic Congress minority in parliament has raised questions about the legality of the 2 billion dollar infrastructure agreement entered between the government and the Sinohydro Corporation Limited of China.

This minority is challenging the position of the government that the deal is a barter agreement that will allow Ghana trade refined bauxite for infrastructure, especially roads, bridges, interchanges, hospitals, housing, and rural electrification.

Read: Concerned Minority members condemn political fakery

Prior to this, the Member of Parliament for Adaklu Constituency, Kwame Agbodza, had raised similar concerns about the agreement, arguing a barter trade does not require the payment of interests, commitment fees and management fees as captured in the contract.

Contrary to the submission of the Finance Minister, Ken Ofori-Atta, on the floor of parliament, Thursday,  July 19, 2018, that the agreement “would not add to the debt stock”, the minority thinks otherwise.

“We are of the view that the Hon. Minister cannot unilaterally decide to take the ‘so-called’ barter agreement off the public debt”, the minority observed in a petition to the  International Monetary Fund (IMF).

In the petition which seeks clarifications on “some legal and technical issues as wells some inconsistencies contained in the supposed barter transaction”, the minority argued the constitutional provision on which the agreement is premised makes it a loan and not barter.

Read: Ghana won’t return to IMF after current programme – Akufo-Addo

Deal Inconsistent with the Constitution 

They argued Article 181 of the 1992 Constitution and Sections 55(1) and 56(1) of the Public Financial Management Act, 2016 (Act 921) which the finance minister cited are for loan agreements.

Portions of the petition capture some of the constitutional provisions cited to support the argument that the arrangement is a loan:

“Article 181 (1)

Parliament may, by a resolution supported by the votes of a majority of all the members of Parliament, authorise the Government to enter into an agreement for the granting of a loan out of any public fund or public account.

Article 181 (2)

An agreement entered into under clause (1) of this article shall be laid before Parliament and shall not come into operation unless it is approved by a resolution of Parliament.

Article 181 (3)

No loan shall be raised by the Government on behalf of itself or any other public institution or authority otherwise than by or under the authority of an Act of Parliament.”  

The minority maintain that “his [Finance minister’s] so-called barter agreement is a LOAN and must be treated as such. Hence, he will be engaging in an illegality if he attempts to do otherwise.”

“Buyers Credit” arrangement 

They further argued that the arrangement of the agreement is a “Buyers Credit”, which makes Ghana (Ministry of Finance or its Assignee) a debtor and Sinohydro Corporation Limited, a creditor.

This arrangement according to them “makes it a loan and not a barter agreement”.

The minority is again convinced that the facility cannot be a barter and yet  “mandates the Government of Ghana to provide Collateral by issuing Letter of Support (“LoS”) and Escrow Account Agreement as security documents.”

The minority is, therefore, demanding that the transaction should be included in accessing the Government’s fiscal position at any given point in time.

Read full petition here


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