228. Telegram From the Department of State to the Embassy in Ghana0

143. Embtel 141.1 World Bank has accepted GOG letter re financial policy. Dept. has not seen text but assumes GOG committed to consult re level debt service and development expenditures without fixing absolute ceilings. Agreement was based on Kaldor’s suggested formula that debt service be related to level exports and development expenses to GNP. Kaldor departed prior conclusion of talks leaving Gbedemah in charge.

World Bank did not insist on set aside GOG’s share of financing, but President Black thought GOG would be wise set aside foreign exchange component. Gbedemah agreed and said total would be appropriated and be first charge from Consolidated Fund. Set aside of about G# 10-15 million from existing foreign exchange reserves will be drawn only if current earnings insufficient to cover. Bank accepted this. FYI. Bank has not previously required such set-aside from other borrowers, but in this case GOG (Gbedemah) had made offer. Kaldor had indicated to us earlier such arrangement would be acceptable and no reason to believe any differences to be resolved on GOG side. End FYI.

Remaining issues concern current negotiations Valco loan by ExIm Bank. Target date for comprehensive signing now August 29.2

  1. Source: Department of State, Central Files, 845J.2614/7-2761. Confidential. Drafted by Kenney, cleared by Padberg, and approved by Kerr.
  2. Telegram 141 from Accra, July 17, reported that the Ghanaian-IBRD talks in Washington on the Bank’s financing for the Volta Project seemed to have been successful, and that the Government of Ghana was planning to present a side letter describing Ghana’s level of economic development and rate of debt repayment in terms that would satisfy the Bank. (Ibid.)
  3. An investment guaranty contract providing substantial protection for the proposed equity investment in Valco by Kaiser Aluminum and Reynolds Metals was initialed by representatives of the Development Loan Fund and the investors on September 1. The Executive Directors of the World Bank approved the proposed loan of $47 million to the Volta River Authority on September 7.