GETFund to use 60% of inflows to service debt

The Ghana Education Trust Fund (GETFund) will use GH₵866m from its total projected inflows of GH₵1.4bn in 2021 to service debt, a parliamentary report has revealed.

The situation, according to the report of Parliament’s Committee of the Whole on the proposed formula for the distribution of the fund, will leave the institution with only 40 percent of its inflows to spend on projects and programmes for the year.

The Administrator of the fund, Dr. Richard Boadu, told lawmakers on the committee that the situation was of “grave concern” given that it will impact on other activities.

The committee suggested to officials of GETFund that since the fund’s inflows are tied to a percentage of projected revenues, which could sometimes experience shortfalls, the fund should focus on utilising its inflows to fund projects instead of resorting to borrowing.

Justifying the fund’s borrowings, GETFund officials said it allows the fund to adequately finance and complete its projects on schedule, which helps to avoid high variation costs caused by delayed completion of projects.

This project variation cost, which typically adds 40 percent to a project’s initial cost, is much higher compared with GETFund’s average borrowing rate of 20.5 percent, they added.

This year GETFund will spend GH₵175m, constituting 12.2 percent of its projected inflows, on projects and programmes in tertiary education, with secondary education allocated GH₵74m and basic education GH₵66m.

The fund has also set aside GH₵30m for MPs Emergency Projects and Monitoring Activities.