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AfDB Group Approves US$ 141.3 Million Budget Support Loan to Ghana


Tunis, 17 September 2008 – The Board of Directors of the African Development Fund (ADF), the concessionary window of the African Development Bank (AfDB) Group, has approved a loan of 90 million Units of Account (UA*), or US$ 141 million to finance Ghana’s 3rd Poverty Reduction Budget Support  programme (PRSL III).

The operation will support the government’s objectives of growth, employment, income generation, good governance and civic responsibility as contained in the 2005-2009 Country Strategy Paper linked to the government’s Growth and Poverty Reduction Strategy (GPRS II).

The programme is expected to improve governance in relation to public financial management, energy reforms, and private sector development as well as gender mainstreaming. Increased credit to private sector including approved legislation that facilitates private business environment is expected to lead to employment creation and generations of income thereby improving the living standard of the people. Economic growth (GDP) is expected to rise or stay above six percentage point level.

Budget processing and execution is also expected to improve and reduce wastage through alignment to procurement act and regulations. The public finance management reforms will also increase accountability and transparency in the management of public resources. Improved management and production of energy will enhance industrial development even at small scale level and increase economic activity as well as create employment.

The programme is expected to generate the following outcomes:

  • A business enabling environment for the private sector, with efficient and cost-effective services in business regulation, trade facilitation, commercial justice, etc. and key reforms rolled out into the regions;
  • Transparent budget process; compliant budget execution in line with the public procurement act;
  • Coordinated and decentralized financial management in district assemblies;
  • Cost effective and sustainable energy sector and restored financial viability of the Volta River Authority (VRA) and Electricity Company of Ghana (ECG) as well as gender mainstreaming in these areas.

The PRSL III builds on PRSL II (2005- 2007) and will complement ongoing Bank projects such as the recently approved private sector project which provides credit through commercial banks to small and medium enterprises; the urban poverty reduction project which builds capacity of ministerial departments and agencies and the Gender Responsive Skills and Community Development project which also builds institutional capacity in ministries and districts. The Ghana Power System Reinforcement Project approved in November 2007 will also complement and consolidate achievement of the current programme to maximize impact.

The overall budget support programme in Ghana is supported by eleven Multi-Donor Budget Support (MDBS) members who are signatories of the MDBS Framework Memorandum (FM) which describes the common framework for the implementation of grant and loan agreements to support the Growth and Poverty Reduction Strategy (GPRS II).

The Bank Group started public sector operations in Ghana in 1973. To date, the Group’s cumulative net commitments to the country stand at US$ 1.7 billion for 79 operations.

* 1 UA = 1.56988 US$ as at 17/09/2008


Felix Njoku Phone: +216 71 10 26 12

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