Banking crisis: Money borrowed for clean-up could’ve saved banks – Minority

The government could have spent less than the almost GHC23 billion used for the financial sector clean-up on saving jobs instead of closing down financial institutions, the Minority in Parliament has asserted.

The financial sector clean-up commenced by the Akufo-Addo administration in August 2017 has led to the collapse of nine universal banks, 347 microfinance companies, 39 microcredit companies or money lenders, 15 savings and loans companies, eight finance house companies, and two non-bank financial institutions.

The Vice President, Dr. Mahamudu Bawumia, blamed the mess in the sector on what he described as the weak oversight of the Mahama government.

But former President John Mahama insisted that the National Democratic Congress began the cleanup by commissioning a report on the sector before losing the 2016 elections.

Addressing the press on Tuesday, a member of Parliament’s Finance Committee and MP for Bolgatanga Central, Isaac Adongo said the current government could have implemented the plan put in place by the Mahama administration to save the sector.

“The Ghanaian taxpayer would have been spared the high cost of this chaotic reform with Bank of Ghana if the Bank of Ghana had listened and followed the reform programme initiated by the NDC.”

He also described the BoG governor as a “needless talkative who caused panic and crass confidence in the financial sector” thus contributing the financial struggles.

A major point of contention from the collapsed banks has been the inability of the government to pay contractors who were owed money by the government for work on state projects.

Mr. Adongo argued that the government could have stabilized the banking sector if it had rather borrowed a significantly less amount to settle the contractors.

“Why would the government be ready to borrow GHC14 billion to close down banks and a further GHC7 billion to close down savings and loans companies as well as GHC2 billion to shut down microfinance companies but was not ready to use a fraction of this amount to pay government’s debt to contractors which largely accounted for the slide into insolvency of several cases of the collapsed banks?”