Following government talks with Standard Chartered Plc and Standard Bank Group Limited in order to secure a bridge financing arrangement of US$750 million, government intends to commence some of the 22 projects scheduled to be undertaken from 2019 to 2022.
Projects to be embark on under various ministries cover agriculture, education, health, housing, aviation, roads and highways, fisheries and aquaculture, sanitation and water resources, as well as local government and rural development.
However the bridge finance facility will only be used to start some of the projects as it is to be repaid with the proceeds of an imminent Eurobond sale of up US$2 billion of which US$2 billion has been earmarked for the infrastructure projects. This means that financing of the infrastructural projects will be taken over by Eurobond proceeds within the next few months.
The projects are a reaction to criticism that fiscal consolidation has greatly reduced capital expenditure over the past two years, as government has opted to slash development spending in the face of revenue shortfalls, rather than exceed its fiscal deficit target. However the rebasing of the economy last year has reduced the public debt to Gross Domestic Product ratio from about 65 percent to barely 55 percent, which government sees as expanded fiscal space to borrow for development projects.
Financing requirement for 2019
Arising from the approved total revenue and grants and expenditure for 2019, government’s fiscal operations target an overall budget deficit of GHc 14, 535.9 million, equivalent to 4.2 percent of GDP.
This deficit is expected to be financed from domestic and external sources.
A total net of GHC 4,401.78 million is expected from domestic sources, whereas GHc 9,748.10 million from external sources.
Other financing items include expected inflows from the monetization of mineral royalties, amounting to GHc 1, 418.95 million.
By Joshua W. Amlanu