The government directive to the Ministry of Finance to settle victims of The Bank of Ghana (BoG) clean-up exercise in the banking sector is commendable, but must be executed with prudent financial discipline to mitigate the country’s current inflationary pressures.
The allocation of $1.5 billion, though substantial, represents a responsible effort by the government to address outstanding costs incurred from the BoG’s 2018 revocation of licenses from five banks and other financial institutions for breaching banking regulations.
Emmanuel Owusu, Policy Analyst and Executive Director of MoRAG, emphasized these points during an interview on Ahotor 92.3 FM’s Adekyee Mu Nsem Morning show hosted by Alex Nana Dobey in Accra.
Looking at Ghana’s economic indicators, the Government Debt to GDP ratio reached 84.90% in 2023, with a historical average of 47.82% from 1990 to 2023. Owusu stressed the need for the government to clearly outline the disbursement plans for these funds, as many affected customers continue to endure severe economic hardships since losing their investments.
He urged the government to provide transparency in how the funds will be distributed to regain confidence in the financial sector. Additionally, he called for an enabling business environment that safeguards investments, recognizing that while individuals are accountable for their investment decisions, the government plays a crucial role in protecting citizens’ investments.
In related news, Finance Minister Mohammed Amin Adam announced that the release of funds will occur between June and October 2024.
“The President has instructed a further bailout. We will disburse GH¢1.5 billion to affected parties by October 2024, although the total required amount is GH¢4 billion,” Minister Adam stated.
The BoG’s clean-up exercise, conducted between 2017 and 2020, involved withdrawing licenses from nine indigenous banks and over 300 other financial firms to avert a banking crisis. Some banks were consolidated, while others merged under the Consolidated Bank Ghana (CBG) umbrella.
The exercise also increased the minimum capital requirement, prompting mergers among banks unable to meet the new standards.
Story by: AYM Kukah
