17th May 2024

Former President John Mahama

The Minister of Finance, Ken Ofori-Atta, has revealed that government’s total expenditure on the financial sector cleanup and bailout amounts to GHC21.6 billion, representing 5.6 per cent of Ghana’s Gross Domestic Product (GDP).

 

He describes the mess created in the financial sector and the money spent to clean it as a “legacy of financial enslavement from the previous administration.”

Presenting the 2020 Mid-Year Budget Review in Parliament yesterday, Mr Ofori-Atta said it was imperative for the government to make such a move, which was part of the efforts to fix a broken economy that “deliberately caused the downfall of banks which were fatally insolvent” at the time the Akufo-Addo government took office.

“The authorities, with foresight and appreciation of the role of the banking/financial sector to any economy, especially to oil, the engine of the private sector, introduced painful but unavoidable reforms to clean up the mess inherited from the previous government.

“The timely intervention under this administration resulted in the saving of these locked up funds in failed banks. This was a sobering but necessary action that in total is costing the state in excess of GH₵21billion of taxpayers’ funds,” he said.

The Finance Minister pointed out that, in a bid to restore sanity in the financial space, President Nana Addo Dankwa Akufo-Addo went the extra mile to save depositors fund “which is unusual in banking practice, globally.”

Breakdown

Mr Ofori-Atta told the Parliament that, at the end of first quarter 2020, a total amount of GHC13.6 billion was spent on the resolution of failed banks, Specialised Deposit-taking Institutions (SDIs), Micro Finance Institutions (MFIs), the establishment of the Consolidated Bank Ghana Limited (CBG), as well as the capitalisation of the Ghana Amalgamated Trust (GAT).

 

He added that, with the President’s directives to fully pay all depositors, whose funds were locked up with the failed SDIs and MFIs, an amount of GH₵5 billion was spent.

 

“This brings the total expenditure on financial sector interventions as of June 2020 to GHC18.6 billion, which is 4.8 per cent of GDP. The government has also committed an amount of GHC3.1 billion (0.78 per cent of GDP) towards supporting investors in failed asset management companies regulated by the Securities and Exchange Commission (SEC),” he said.

Source: Daily Statesman

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