An Economist and Director of the Institute of Statistical, Social and Economic Research (ISSER), Professor Peter Quartey is calling for a robust policy on the termination of Government contracts. According to him, this will help the country to ensure that it follows all the due processes on termination of contracts.
His comments come after a recent public outcry on judgment debts in the country. These debts drain the country of huge sums of money. More recently, the cancellation of the government’s Emergency Power Agreement with GCGP Limited resulted in $134 million judgment deb .
“For me, a clear directive or policy on how to terminate contracts is needed. If it’s there already, then it has to be re-activated. I think as a matter of urgency, we need a robust one”.
Prof. Quartey noted that some of the judgment debts occur outside the control of the officials or the various ministries in charge.
Instances that may result in Judgement Debts
According to him, it sometimes becomes very necessary to terminate certain contracts because of the unavailability of funds. He explained that sometimes this happen because the funds do not come in at the right time. And this may result in the termination of such contracts.
Secondly, he cited non-performance as another factor that may warrant the termination of a government contract. Prof. Quartey explained that a contract may be terminated if one party to the contract is not performing as per the terms. He pointed out that government may terminate certain contracts if the contractor is not performing to meet the deadline. And more so, if delays in the project execution may lead to escalation of costs.
Meanwhile, he also alluded that government sometimes terminates certain contracts without many details. To such contracts, Prof. Quartey believes there is nothing the citizens can do about them.
A careful analyses of contracts before termination
Nonetheless, Prof. Quartey called on the government to critically examine the clauses before terminating any contract. He explained that it will help the government save monies for investment in other areas instead of paying judgment debts.
“It is proper to look at the termination clauses properly before terminating, or you need to re-negotiate”.
He stated that most often than not, such contracts leave room for renegotiation. Therefore, in such instances, the government must resort to negotiations rather than terminating the contract. This is to make sure that both parties to the contract are satisfied. So that in cases where there is something they will have to do to ensure continuation and execution of the contract, then that will be done.
“Once termination is done and judgment is not given in favor of the country, it brings additional costs. You are paying money for services you have not enjoyed. These are resources that could have been used to provide certain essential services. But here we are using that money to pay judgment debts”.
Other effects of judgement debts
Furthermore, Prof. Quartey revealed that the cost of judgment debts goes beyond the monetary costs. He noted that frequent termination of contracts without due diligence will only give international investors a bad impression about the country.
“If the termination is done without following the due process, it gives the investor community the perception that this is a country that does not respect agreements. So, your risk profile goes up. Every investor will look at these things and say this is a risky country. So, if I invest, I may or may not execute the contract. And therefore they build in all kinds of clauses to ensure that when you terminate, they don’t lose out. That brings an extra burden on the country. Your risk profile to international investors increases”.
Dealing with Ministries or officials in charge
A section of the public has called for sanctions on the ministers and other officials who were involved in the contracts that resulted in judgment debts.
However, Prof. Quartey believes that there is no need punishing officials that follow the due processes to terminate contracts which later resulted in judgment debts. He explained that the attorney general’s office is served a notice before any agreement involving the state is terminated. According to him, once the Attorney General approves the termination of any contract, then there is no need to accuse the ministers or ministries involved.
Meanwhile, he called for punitive measures to be taken against officials who do not follow the lay-down procedures before terminating contracts that later result in judgment debts.He added that if the proper procedure is followed and the attorney general gives the go-ahead to terminate the contract then there is less likelihood that it will result in judgment debt. policy policy policy
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