IMF raises red flag over Ghana’s Sinohydro deal

IMF raises red flag over Ghana’s Sinohydro deal. This is not good news. Ghana’s Sinohydro deal with China has been hit by criticism from the leading opposition party NDC in Ghana and so has the IMF raised an alarm over Ghana’s Sinohydro deal

Ghana’s $2 billion infrastructure for bauxite deal with China’s Sinohydro has come under the lens of the International Monetary Fund (IMF).

The concerns of IMF have come to indicate that there are issues of great concern. The agreement entered into between Ghana and China regarding the Sinohydro deal is that the Ghana Integrated Aluminum Development Corporation (GIADC) must open and operate an escrow account is required offshore for all revenues generated from the sale of the bauxite to be sold from the newly discovered bauxite of Ghana.

The reasoning behind this is probably to secure the repayment of the $2 billion facility to Ghana. If this is implemented, the funds paid into the said escrow account will be to the exclusive benefit of Sinohydro.

Sinohydro Scenario with a civil servant

This system could be akin to a situation in which let say a bank named “A” provides a civil servant and loan of GHS2000.00 and request per the agreement that, your salary shall pass through a special account opened in your without you been a signatory to the account. So that at any time at the end of the month, your salary will remain intact in the account for the bank to do its automated deduction and you cannot spend a penny from the account. If the hypothetical case was real and you were the civil servant, would you go ahead to seek the loan in the bank or you will look elsewhere?

Ghana led by President Nana Addo is looking at a quick fix with this loan without looking at the dangers inherent and the sovereignty of Ghana politically and economically. This deal is at the expense of Ghana today and our future.

Some of the losses Ghana will suffer

  1. The Atiwa forest covering 26,000 hectares in the south eastern part of Ghana will be destroyed.

  2. The rich bauxite, manganese, and iron mineral resource in the area will be for the Chinese

  3. The habitat of some of the rare and endangered species will be destroyed and their lives sacrificed.

  4. Atiwa forest holds over 960 million metric tons of bauxite reserves. This is valued at more than $500 billion.

  5. China would exploit our bauxite for 15 years

  6. China will not receive cash as repayment but bauxite which hardly loses value.

  7. Ghana is selling her rich bauxite for peanuts

  8. The Chinese would mine the bauxite and refine it for as long as they stay.

  9. The Chinese will be in charge of all revenues from the sales we make.

The IMF is on point by stating that this is a bad deal because it will prevent Ghana from having access to the revenues from its resources and also Ghana cannot use her own discretion regarding how her resources(bauxite) is used. The International Monetary Fund (IMF) thinks the steps taken by Ghana to commit future bauxite earnings to the serving of the debt amounts to locking up her bauxite sales proceeds.

The agreement is clear on all the financial obligations that Ghana owes in the deal and indicates that fund shall only be transferred from the finance ministry to GIADC for payments.

The IMF also raised issues regarding at what point in time will the government of Ghana stop having obligations towards the Sinohydro

The IMF holds the view that there is a risk inherent and that, the government may end up taking care of the burdens of GIADC if it fails at a point in time to meet its financial obligations under the deal.

Cutting of Sinohydro sod

In April the president of the Republic of Ghana, Nana Addo Dankwa Akufo-Addo cut the sod to pave way for field works to commence under the agreement. This marked the commencement of the construction of the Tamale Interchange which is expected to be part of a total of 442 kilometers of roads to be constructed under the agreement.

Ghana is not in this alone, find out what China is doing in Africa and you will appreciate the issues.

There is also a research paper on this. Follow the link: Is China Colonizing Africa? Africa – China Relations in a Shifting Global Economic Governance System and take a critical look at it.

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