Ghana needs GH¢28 billion to fully clean up the banking sector, former President Mahama discloses

According to him, aside from the GH¢15 billion approval from Parliament to use in reforming the banking sector, an additional GH¢13 billion will be required to complete the exercise completely.

“Parliament, recently, approved GH¢15 billion to support the cost of the banking sector clean-up, our estimates show that going by the reckless path this government chose with its attendant job losses and collapse of businesses, an additional GH¢13 billion will be required to complete the exercise of the financial clean-up,” he said.

Former President Mahama disclosed this when had an interaction with journalists on Thursday, January 30, 2020.

He said, “Now, it’s interesting to note [that] government did not make any provision for the cost of the banking sector crisis in both the 2020 budget and the three-year medium-term expenditure framework, there’s no provision for the financial sector clean-up.

Adding that “Again, this was done to dishonestly lower the projected budget deficit and give a false picture of satisfactory fiscal performance in 2020, which is an election year.

“This is what a nation reaps when it has a president who thinks predominantly about the next election and not putting things right”, Mr Mahama noted.

Background

In December last year, President Nana Akufo-Addo granted executive approval for the expenditure of GHS15.6 billion to save the funds of depositors of the various financial institutions that were collapsed by the Bank of Ghana as well as shore up the liquidity of the financial sector.

A letter addressed to the Minister of Finance, Mr Ken Ofori-Atta, by the President’s Executive Secretary Nana Asante Bediatuo, said, “The President has granted executive approval for an expenditure of up to fifteen billion six hundred million Ghana cedis (GH¢15,600,00,00.00) toward protecting depositors and investors of failed financial institutions and to improve liquidity of the financial sector”.

In the past two years, the Bank of Ghana’s reforms has led to the collapsed of nine local banks, 347 microfinance institutions and some 23 savings and loans and finance houses.

The collapse of the nine local banks birthed the state-owned Consolidated Bank Ghana (CBG) Limited.