Ghana's Ruling Party Wants to Use Oil Revenue for International Loans

http://www.bloomberg.com/news/2010-11-23/ghana-s-ruling-party-wants-to-use-oil-revenue-for-international-loans.html

Ghana’s ruling party wants to change an oil-revenue bill being debated by lawmakers this week to allow the West African nation to use energy-industry funds as collateral for borrowing on international capital markets.

Moses Asaga, chairman of the parliamentary energy committee and a member of the National Democratic Congress party of President John Atta Mills, said using the country’s oil wealth would allow them to borrow funds to develop infrastructure.

“In the short term we want to move the standard of living of Ghanaians,” Asaga told lawmakers today. A draft of the bill released in August banned the government from borrowing against revenue earned in the nascent energy industry. Ghana is set to become Africa’s newest oil exporter next month when production begins at its offshore Jubilee oil field.

Using the oil revenue as collateral will lead to over- borrowing and high levels of debt, according to some members of the country’s biggest opposition group, the New Patriotic Party.

“I do believe this will be the beginning of the oil curse in our country,” Joseph Adda, a former energy minister and NPP member of parliament, told lawmakers today.

Ghana expects to earn 584 million cedis ($403 million) in fiscal revenue from oil next year, Finance Minister Kwabena Duffuor said Nov. 18. Earnings from the growing industry will help lift economic growth to 12.3 percent, he said.

To contact the reporter on this story: Jason McLure in Accra at jmclure@bloomberg.net.

To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net.