Additional ¢13b needed for banking sector cleanup – Mahama claims
Source: Myjoyonline.com | Naa Sakwaba Akwa | E: firstname.lastname@example.org The former president, John Mahama has said ¢13 billion more is needed to complete government’s banking sector cleanup.
Mr Mahama during a Facebook live broadcast on Thursday, said the ¢15 billion approved by Parliament to support the cleanup has not served its purpose due to government’s mishandling of the exercise.
“Our estimates show that going by the reckless path this government chose with its attendant job losses and collapse of businesses, an additional ¢13 billion will be required to complete the exercise of the financial sector cleanup,” he said. As part of its efforts to restore confidence in the banking and specialised deposit-taking sectors, the Bank of Ghana embarked on a clean-up exercise in August 2017 to resolve insolvent financial institutions whose continued existence posed risks to the interest of depositors.
Giving reasons for the banking sector clean-up, the Deputy Chief Manager of the Banking Supervision Department of Bank of Ghana, Mustapha Sarbeng, said some the financial institutions granted huge unrecoverable loans and engaged in excessive high-risk undertakings coupled with poor corporate governance in the face of low capital.
As a result, he pointed out that these institutions were rendered insolvent, a situation necessitating government’s intervention through the Central Bank’s revocation of their licences and the reorganisation of some of them, including the Ghana Commercial Bank takeover of the UT Bank and Capital Bank.
In all, nine universal banks, 347 microfinance companies, 39 microcredit companies, 15 savings and loans companies, eight finance house companies and two non-bank institutions were closed. The licenses of 53 fund management firms were also revoked.
President Akufo-Addo in his Christmas message promised to pay customers of these financial institutions in full.
But Mr Mahama, who is the National Democratic Congress’ flagbearer, wondered how government will make these payments when no financial provisions were made for it.
“Government did not make any provisions for the cost of the banking sector crisis in both the 2020 budget and the two-year Medium Term Expenditure Framework (MTEF).
Mr Mahama said although government had no plan on how to handle the financial sector clean up, it deliberately undertook the exercise to “dishonestly lower the projected budget deficit and give a false picture of satisfactory fiscal performance in 2020 which is an election year.”He accused President Akufo-Addo of being hard-hearted to the plight of Ghanaians because, his only focus is on […]