Rejection of ‘Gang of Four’ project loan by China

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Finance Minister, Seth Terkper, has played down China’s rejection of a loan application by the government of Ghana for the construction of some road projects.

Speaking on Joy FM’s Super Morning Show Friday, Mr Terkper said although details of the reason for rejecting the loan by the Chinese are not readily available to him, it should not be seen as a major setback.

“The rejection of a loan is not new…It happens often times”, Finance Minister said.

He revealed that a team from Ghana is likely to pursue the rejected loan at the China Development Bank (CDB) in the coming days.

The Chinese rejected the loan application on the grounds that the road projects – the Asikuma junction-Have, Nkwanta-Oti-Damanko, Apedwa-Suhum and the Sofoline interchange, collectively called the ‘Gang of Four’ – were not commercially viable and hence not capable of repaying the loan by themselves.

Terkper said that may not be exactly wrong.

“The Chinese don’t give us one type of loan. The Chinese give us loans which are concessional; the Chinese give us loans which we take preferential credit and there are commercial loans and the Exim expects that when you apply for a loan for a commercial project the project should be able to pay for itself”, he explained.

He said if the Chinese said the ‘Gang of Four’ project is not commercially viable, it is possible a concessional loan – which would have been a good type of loan for the project – was not available at the time.

He said although there were plans to toll the roads to make it commercial, it is possible the Chinese did not find them viable enough.

“Probably their [Chinese] analysis is showing that…the tolls may not be viable yet. This is where you go for mixed credit…or branded credit”, he said to explain that perhaps the type of loan Ghana applied for did not conform to the ‘Gang of Four’ project.

He said government was keen on pursuing smart borrowing which involves ensuring that every project for which a loan is taken is viable to repay the loan.