The World Bank had toughened the terms under which it grants loans to Ghana. Ghana as a lower middle income status country used to get soft loans from the World Bank at duration of 40 years and at a cost of 0.35%.
Following Ghana’s attainment of a lower middle income status, the bank has reviewed the terms and will now lend to the country for duration of not more than 25 years and a rate of 1.25%.
Ghana will however now be granted access to bigger credit facility from the bank.
A financial analyst, Dr Daniel Seddoh has told Citi Business News, the World Bank’s new stance on disbursement of loans to Ghana will put extra pressure on government’s purse.
“Now the tenure is shorter, it means we will have to pay a lot more monthly or annually or even if it’s a bullet payment. It will take a shorter time to mobilize payments and that will come with its own pressure.”
Dr Seddoh advised government must put measures in place to improve its cash flow to minimize the impact.
“So it is about how we allocate resources to productive sectors-things that we do to generate more revenue and those that will force us to pay back the loan and also do some social intervention. If we take loans and use it for most for social intervention, we will come under tremendous pressure. What we will subsequently do is that, we have to borrow again to pay for the previous loan.”
“If we should identify productive ventures to channel those resources in, we will certainly do well,” he said.