Governor of the Bank of Ghana (BoG), Dr. Ernest Addison has disclosed that only GH¢2 billion has been recovered from the defunct financial institutions.
Instructively, government has spent over GH¢21 billion to ensure that depositors’ funds are protected after the Bank of Ghana instituted measures to clean up the banking sector which led to the folding up of some financial institutions. However, after the money pumped into the recovery of depositor’s funds, just GH¢2 billion has been recovered so far. As such, the remaining amount to be recovered exceeds a little over GH¢19 billion.
In a virtual press conference in Accra which centered on the condition of assets recollected so far to cover the humongous amount spent on the exercise, Dr. Addison indicated that, the reason for the seemingly slow pace of the process is because there has been bottlenecks thwarting their progress.
He, however, indicated that he is confident that, with time, the receivers of these financial institutions will recover large amounts from the shareholders and directors of the collapsed banks.
“The data we have on total recoveries is around GH¢2 billion. As we know, the receivers are in court with the shareholders and directors, trying to retrieve the assets of these defunct institutions and it takes time. The wheels of justice in this part of the world grinds slowly so the process of recovery of these assets is more complicated and it takes time but hopefully we are confident that we will get there.”
Breakdown of the over GH¢21 billion
The Finance Minister, Ken Ofori-Atta, has also made it public that as of the end of April this year, government had spent a total amount of GH¢13.6 billion, which constitutes 3.5 percent of GDP, on resolving issues with the defunct banks. These include, folded banks, Microfinance Institutions (MFIs), Specialised Deposit-taking Institutions (SDIs), the integration of the Consolidated Bank Ghana Limited (CBG), and also the capitalisation of the Ghana Amalgamated Trust (GAT).
In addition and on the orders of the President, an amount of GH¢5 billion has been spent to fully pay all depositors whose funds were locked up with the failed SDIs and MFIs. GH¢3.1 billion has also been spent to prop up investors in failed asset management companies regulated by the Securities and Exchange Commission (SEC).
The amount spent so far on paying depositors and reforming the financial sector add up to a total of GH¢21.62 billion which represents 5.6 percent of GDP.
During the Mid-year Budget presentation at Parliament last week, the finance minister justified the amount spent on the reformation of the sector after assertions from some shareholders and customers of the defunct financial institutions that, the process is riddled with ill political intents.
“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 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.”
However, former President John Mahama has promised to establish a Financial Services Authority that will ensure that, the interests of customers of financial institutions are protected.
