Ghana: Deficit target widens in 2011 budget, more loans contracted

On 21st July parliament approved a revised 2011 budget raising the public deficit target from 4.1 per cent to 5.1 per cent of GDP. The supplementary budget will also increase spending by GH¢1.5 billion for the year, allowing for more investment in infrastructure and social issues.

The Finance Ministry has said the new spending will target job creation and comes after Ghana raised its predictions for oil revenues.

During the debate, members of the parliamentary Minority criticised the government for its “excessive” borrowing culture, accusing the National Democratic Congress (NDC) government of building up more debt in two years than the New Patriotic Party (NPP) had done over a period of eight years in government.

Parliament went on its annual summer recess on 22nd July having approved three loan agreements at its last sitting. Opposition politicians and anti-corruption activists claim that all contracts are overpriced and could be used to help finance the ruling party's 2012 election campaign

The loans include a US$337 million (GH¢505.6 million) agreement with the Bank Hapoalim BM of Israel for the construction of a 59-bed hospital for the University of Ghana and additional works on the Ho Regional Hospital and Hohoe District Hospital (both in NDC-supporting areas); a €13 million (GH¢28 million) agreement with ABN AMRO Bank NV of the Netherlands to finance the additional works on the Barekese Water Supply Expansion Project; and a US$800,000 (GH¢1.2 million) loan agreement with Canada's Société Générale to finance additional works on the ongoing 132-megawatt Combined-Cycle Thermal Plant at Aboadze.

During its third session, five out of nine bills put before parliament were passed: the Petroleum Commission Bill, the Bio-Safety Bill, the Law Reforms Commission Bill, the Health Institution Facilities Bill and the Export Development and Investment Fund Bill.

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© 2011 Menas Associates