OTEC News can confirm that this morning, the vaults of Ghana’s central bank were effectively $750 million heavier, as the much anticipated Afreximbank loan facility hit the accounts of the Bank of Ghana (BoG).
With the Ghana cedi enjoying some relative stability this week after the BoG’s latest round of measures, the additional forex should further boost confidence in the local currency.
The 750 million united states dollars financial facility secured by the Government of Ghana from the African Export-Import Bank (Afreximbank), was approved by Parliament on 20 July 2022.The facility is expected to finance capital and growth-related expenditures in the 2022 Budget. It will also give a big boost to the local currency, by helping to stabilize the cedi, which has been under serious depreciation pressure this month, especially.Afreximbank approvalAsaase News sources familiar with the agreement, on 14 August 2022, confirmed that the board of Afreximbank had approved the loan and that the “facility agreement has reached the final stage.”A senior Government official indicated that the “Afrieximbank has received board approval, a critical condition precedent (CP),” before the disbursement.
“The fees letter has been agreed and final draft issued. The signing of the facility will take place once the final draft is submitted by Afrieximbank and agreed by the Ministry of Finance (MOF)” the source said.
With growing concerns over the fate of the cedi, Asaase news followed the progress of the U$750m injection of foreign exchange into the economy.
The signing of the credit facility took place on Wednesday 17th August, after the Finance Ministry does raised on objections,” an OtecNews source in Cairo added.
Drawdown timelinesGovernment has cut its own budgeted expenditure down by 30% and has put a hold on starting any new projects. What has not helped is the low levels of receipts from revenues and the high rise in inflation.The economic difficulties have been biting, affecting businesses and families. Government has, however, been praised in some quarters for being able to keep our lights on and avoided essential commodity shortages such as petroleum products.Loan syndication approachGiven the hikes in global interest rates and our macro situation, the decision was made by Government not to issue any Eurobond in 2022 until market conditions improve.
Government, therefore, provisioned in the 2022 Budget to use the loan syndication approach to raise the necessary financial resources.
This approach serves two purposes: (1) to enable the country to finance some priority projects in the 2022 Budget; and (2) to provide the needed foreign exchange to the Bank of Ghana to shore up the reserve position of the bank and for foreign exchange management.
Use of proceeds
The proceeds from the loan would largely be used to finance projects in the roads, energy, railways, and health sectors. These projects are those outlined in the 2022 Budget Statement and Economic Policy of Government.
