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Business News of Friday, 24 July 2020

Source: Laud Business

Mismanagement of depositors’ funds resulted in banking cleanup - Ofori-Atta

Finance Minister, Ken Ofori-Atta has told Parliament that mismanagement on the part of the directors of the collapsed banks resulted in the clean up exercise undertaken by the Bank of Ghana (BoG).

Presenting the mid-year budget statement to the House on Thursday July 23, Mr Ofori-Atta said: “The outbreak of the coronavirus pandemic is having a negative impact on the financial sector here in Ghana and across the world. All over the world, central banks are being relied upon by governments to find the liquidity to tackle the socio-economic difficulties unleashed by the pandemic.

“The Bank of Ghana has stepped up to the challenge and announced various policy measures to help support the economy and financial institutions in order to cushion the adverse impact of COVID-19 on the economy.

He added; “It is important to stress that this has been possible because of the responsible and competent management of both the fiscal and monetary space since 2017. As a result of mismanagement, depositors’ funds had been locked up with no hope that these depositors could access their own funds.

Ofori-Atta said; “The authorities, with foresight and appreciation of the role of the banking/financial sector to any economy, especially to oil the engine of the private sector, introduced painful but unavoidable reforms to clean up the mess inherited from the previous government.

“The timely intervention under this administration resulted in the saving of these locked up funds in failed banks. This was a sobering but necessary action that in total is costing the state in excess of GH¢21 billion of taxpayers’ funds. These are funds that could have been otherwise deployed to support the development agenda of the government.

“Let it be said that a serious government, as we are, desperate as we were to fix a broken economy as it was and fund our own programmes, as promised, and as patriotic as we are, had absolutely no thoughts, no time, no energy or the luxury to conspire with the central bank to deliberately cause the downfall of Ghanaian banks that were already in a zombie state, fatally insolvent, by the time we took office.

“What we did was to merge those that had failed, save those that could be saved with the view to building a strong and viable financial sector with integrity. What the President did, which is unusual in banking practice,
globally, was to go the extra mile to save the funds of all depositors of failed banks.

“Let no one stand on the staple and proclaim untruths and let mature Ghanaians be quick to listen, slow to speak and slow to anger,” Ofori-Atta explained.

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