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Dr. Mahamudu Bawumia revealed recently after a four-day visit to China, that the Nana Addo-led government is partnering its counterpart in China for the implementation of the economic transformation agenda.
The funding partnership with China, Dr. Bawumia explained, is not based on the traditional model of borrowing and aid. The new model, he noted, is based on the bargaining power of the country’s natural resources such the 2.8 billion metric tonnes of iron ore deposits, 960 million metric tonnes of bauxite, 413 million metric tonnes of Manganese and not to mention Gold and Cocoa.
But the announcement of the US$15 billion partnership has sparked a massive reaction from a section of the public.
The Campaign Coordinator of ISODEC Dr Steve Manteaw told an Accra based media firm that the cost of the deal far outweighs the benefits.
“If you look at the IMF projections we are not really right in term of the outlook for the commodity sizes…and so to go in at this time to mortgage your natural resources for me is a risk that if we avoided will be better for Ghana.
“There is a lot to be considered in terms of what the benefit and the cost of this transaction…for me I think the cost outweigh the benefit.”
But the Director of the Centre for Asian Studies, University of Ghana, Dr. Lloyd Amoah has downplayed the doubts surrounding Ghana’s latest partnership with China.
“The resources, the new ideas in many ways has more or less shifted to the Asian region… China is stable, and that is what we want for a country like ours that is broke, backward and virtually on its knees, that is how we should think about this instead of this fear and doubt and skepticism.”
Dr. Abbey’s call has been influenced by the country’s inability to secure the entire US$3 billion China Development Bank loan.
There were reports that facility was frozen because the Chinese government wanted Ghana to use its crude oil as collateral, which was not in original agreement.
Government is seeking to leverage Ghana’s natural resources, specifically bauxite, through its recent partnership with the Chinese government that saw the latter pledge to commit over $15 billion to Ghana’s economy.
According to the Economic Adviser to the Vice President, Dr. Gideon Boako, government through the agreement will construct bauxite refineries, which will generate enough income to settle the loan.
“Ghana told the government of China that we are not coming here for loans. We also told them since our tax revenues are not quite enough to be able to raise the kind of money in the short-term, we want to form a strategic alliance with China and they agreed.
“We told them we have a lot of mineral resources so we want to build the railways along the lines of the mineral resources so that we can cart the bauxite and everything,” he said.
He further explained that “if we are able to get the bauxite out of the ground and we refine the bauxite, that alone is going to generate an export value around 460 billion dollars.”
The $15 billion package according to the Vice President Dr Mahamadu Bawumia includes the remaining the US$2 billion CBD loan.
But renowned economist Dr Joe Abbey told JOYBUSINESS it’s critical that the scrutiny is done by Parliament for Ghanaians to know the real cost the economy.
Dr Joe Abbey has, however, downplayed any negative impact of the Chinese financial package to Ghana on the public debt stock.
There are fears that this could quadruple the debt stock, which has reached $127 billion as at April this year. This, the Economist believes the facility was arraigned in a way that would not inflate the public debt.