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Business News of Thursday, 10 November 2016

Source: citifmonline.com

Government makes second payment on legacy debt

The President of the Ghana Bankers Association, Alhassan Andani has stated that banks that were owed by government under the legacy debt have received second payment in the first week of September.

The Ministry of Finance, the Bank of Ghana (BoG), and the Ghana Bankers Association in August announced a roadmap aimed at clearing the Volta River Authority’s (VRA) debt of GHS4.4 billion, after an initial payment of GHS250 million.

Speaking to journalists in Accra at the sidelines of a BoG and IFC Partnership launch, Mr. Andani explained that the 19 banks owed under the legacy debt received second payment in the first quarter of September.

“We have concluded everything after September, so the down payment came through.

We have GHS250 million upfront payment and we’ve also gotten the September first quarterly payment,” he said. Mr. Andani was optimistic that the banking system will begin to reclassify the non- performing assets that were captured under the debt.

He stated that the discussion also addressed the the FX differential issues raised by the Bulk Oil Distribution companies(BDCs). The BDCs have raised concerns over differences in the exchange rate as the time the loans were acquired to purchase crude oil for the VRA to power thermal plants in the country. “So government conducted an audit of what the exchange differentials were with the BDCs, the banks, and the external auditor.

We clearly understand what is now due the banks, and we are in the process of getting that money paid,” Mr. Andani explained.

“Everything has been firmly agreed that before the end of the year the payment due from government on the FX differential will be made.

That will bring down any non-performing assets,” he added.

Legacy debt

As at August 2016, the VRA was indebted (legacy debt) to about 19 commercial banks to the tune of US$ 300 million.

Finance Minister, Seth Terkper announced in that government has made an initial GHS250 million to the banks after which a road map was designed to pay the rest of the debt.