Classify US$2bn bauxite barter deal as a loan – Dr. Lord Mensah

Economist Dr. Lord Mensah has backed calls seeking that Ghana’s $2bn bauxite agreement with China, be classified as a loan.

His view follows the Minority in Parliament’s move to petition the International Monetary Fund (IMF) on the matter.

The side is seeking that the Fund determines to decide whether the 2 billion dollar Chinese deal agreed by the government in exchange for bauxite will add to the country’s debt.

But Dr. Lord Mensah insists that looking at the agreement as a debt will enable the country assess its impact on the economy.

“We shouldn’t look at it as if it is not a debt because we are our exchanging our bauxite with it. If we want to be responsible as far as this money is concerned, then we will have to classify it as a debt other than that, we might not have any obligation towards it,” he said.

Dr. Mensah stressed that classifying the agreement as a loan will attract responsibility in managing the resources.

“So if you ask me the categorization whether we are exchanging it for bauxite or not, we should look at it as a debt. Looking at it as a debt also comes with some obligation, so therefore the money that comes to us will be used purposefully.”

Under the deal, approved by parliament last month, China’s Sinohydro Corp Limited will provide 2 billion dollars for government road projects in exchange for refined bauxite exports.

The Finance Minister, Ken Ofori Atta at the midyear budget review mentioned that the current administration will use proceeds to fund major infrastructural projects.

These include; roads, railways as well as bridges and drains.

“If we look at it as more or less a package that is coming in exchange of our natural resources, then we might not put enough responsibility on this money that is coming to us,” Dr. Mensah re-emphasised.

Source: Citi Business News

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