GH¢1,305.8m Debt Awaits Government

AFTER DEFRAYING much of its debts last year, the stock of arrears as at the end of November 2012 for the Government of Ghana stood at GH¢1,305.8 million.

This was after Government Bonds worth GH¢942.1 million were issued to two major creditors – Ghana Commercial Bank and SSNIT as part of the arrears management strategy.

Information available from the Ministry of Finance & Economic Planning (MOFEP) which made this known, said from 2009 to November 2012, therefore, total cash payments made to liquidate arrears were GH¢3,835.9 million.

“Government negotiated with creditors on the appropriate option taking into consideration its cash flow over the medium term, the possible inflationary impact of cash injection into the economy and the extent of exposure of commercial banks to creditors, especially road contractors.

“Based on these considerations, arrears payments of GH¢1,505.2 million and GH¢420.8 million were made in 2011 and the first eleven months of 2012 respectively.

A recent reconciliation exercise has revealed that GH¢287.1 million oil related and project liabilities have also been paid.”

The cash payments made reflect reductions in the stock of arrears that crystalized on yearly basis (between 2008 and 2011) taking into consideration floats in revenues and expenditures.

The outstanding stock of GH¢1,305.8 million represents GH¢618.3 million project-related debts and GH¢687.5 million in respect of contingent liabilities of SOE’s dating back to 2008 that were incurred outside the planned fiscal activities of government.

Government’s intervention in arrears management has brought relief not only to creditors and suppliers but has also reduced the exposure of commercial banks to the accumulation of non-performing loans (NPLs).

Government arrears include overdue payments to private contractors for road and non road projects wage arrears, arrears to statutory funds.

There are other contingent liabilities associated with state-owned enterprises (SOEs) debt owed to banks.

The stock of domestic arrears stood at GH¢1.8 billion at the end of 2008, based on information available at the time.

The Auditor-General Department has been requested to audit the outstanding project-related arrears to ascertain their genuineness.