Share

US-based Ghanaian Professor, Kwaku Asare has again waded into the car loan controversy for members of Ghana’s Parliament. In a Facebook post, the  Accounting Professor said the loan recommended by the Ntiamoah-Baidu committee is a pure gift structured to disguise its substance.

Scores of Ghanaians are urging Parliament to scrap a request by the Finance Ministry for a $28 million loan from the National Investment Bank (NIB) to purchase 275 vehicles for legislators in the eighth Parliament.

Deputy Finance Minister, Abena Osei Asare, on Tuesday, July 6, laid the request before the parliament.

The Minister also presented a similar request for a $3.5 million car loan for members of the 8th Council of State for them to purchase vehicles.

Read below the full statement by Professor Kwaku Asare

 

Ntiamoa-Baidu’s Auto Loan Proposal is to the effect that (1) the State should facilitate a “loan” not to exceed $80,000; (2) The State should take responsibility for paying 60% of the cost; and (3) The State should take responsibility for the interest of the loan.

In effect, the State should borrow $80,000 at the market rate of interest and swap the $80,000 with the beneficiaries for a fixed sum of $32,000, spread over 4 years.

It seems the approving authorities have gone a step further and increased the loan to $100,000.

It is not immediately known whether the State is taking responsibility for 60% or have volunteered to pay an even higher share.

But assuming the State retains its 60% responsibility, it means borrowing $100,000 at the market rate of interest and  swapping it for a $40,000 payment spread over 4 years.

It is accurate to refer to the transaction between the State and the Bank as a loan. But the transaction between the State and the beneficiaries cannot in any meaningful way be described as a loan.

You cannot give someone $100,000 plus interests and ask that they give you $40,000 over 4 years and call that a loan.

Plainly, it is a gift of $60,000 plus interest structured to disguise its substance.

#SALL is the cardinal sin of the 8th Republic.