Gov't Responsible for 20% of Bad Loans

Ghana’s government is responsible for a fifth of bad loans at the country’s banks because of arrears owed to contractors, suppliers, and municipalities, said Joseph Abbey, director of the Centre for Policy Analysis.

“It is a big factor in the stock of non-performing loans in the banking sector,” he said in an interview in Accra today. Government arrears amount to 2 billion cedis ($1.38 billion), Abbey said, citing research by the organization.

The government’s failure to repay its loans has led to road projects being halted and has left schools and clinics struggling to pay for supplies, Abbey said.

About 16 percent of loans by Ghana’s commercial banks were classified as non-performing as of September, down from more than 20 percent in February, he said. Ghana, which is set to begin exporting oil this month, has a proposed 2011 budget of 12.7 billion cedis.