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The Akufo-Addo government has outrageously accepted to pay a whopping US$ 50 million as insurance premium on a loan of US$250million.
The loan secured in May 2022 is just one example of the outrageous mismanagement of the economy that has now driven Ghana to seek an International Monetary Fund (IMF) midwifing of its fiscal behavior.
The US$ 50 million insurance is captured in a term sheet covering a syndicated term loan facility that the Ministry of Finance had arranged with the Rand Merchant Bank, a division of FirstRand Bank London branch, Standard Chartered Bank and the Standard Bank of South Africa.
The insurer was Africa Trade Insurance (ATI).
“The facility shall benefit from comprehensive cover covering all principal due under the facility together with all interest due over the remaining life of the facility (estimated to be USD50m). Should an event of default occur, the facility insurer shall pay to the lenders all outstanding amounts due under the facility (plus associated interest) according to the original repayment profile and agreed indemnity level,” the term sheet said.
The loan is to mature in five years.
The size of the insurance has left tongues wagging as it appears to imply that investors find Ghana so risky that insurance on the loan alone is 20% of the amount being borrowed.