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Financial sector clean-up costs taxpayers GH¢16.4 billion — Ofori-Atta

The Finance Minister Ken Ofori-Atta has opened up about the overall cost of government’s intervention in the financial sector to protect funds of depositors and investors whose companies lost their licenses in bouts of regulatory actions.

Mr. Ofori-Atta delivering the 2020 budget statement on the floor of Parliament said more than GH¢16.4 billion of taxpayers funds will be used in bailing out 383 institutions regulated by the Bank of Ghana as well as 53 fund management companies which recently lost their licenses after SEC cracked its whip.

“It is important to state that the government has not under any circumstances intentionally collapsed any financial institution. These institutions were insolvent and/or distressed as a result of their own actions, and their respective regulators stepped in to intervene and to save over 4m depositors and investors. Our commitment is to ensure that we provide relief to many of the victims,” Mr. Ofori-Atta said justifying the cost to the taxpayer.

The cost of the clean-up which is estimated at 5 percent of GDP includes funds allocated to the Ghana Amalgamated Trust (GAT) to provide capital for some local banks to meet the Bank of Ghana’s GH¢400 million minimum capital requirement.

The Ghana Amalgamated Trust (GAT) Plc was set up in December 2018 as a policy response to help support five indigenous banks, Agricultural Development Bank, OmniBSIC, Prudential Bank, Universal Merchant Bank and National Investment Bank (NIB) as they were unable to raise equity to meet the central bank’s mandatory minimum capital by 31st December 2018.

Providing a further breakdown of the total cost of the clean-up, Mr. Ofori-Atta said the fiscal cost incurred in protecting depositors in the nine local banks whose licenses were revoked by BoG between 2017 and 2019 was GH¢11.7 billion.

He further stated that it will cost government GH¢2.4 billion to provide some relief to depositors in the collapsed 347 Microfinance Institutions, 15 Savings & Loans and 8 Finance Houses.

The fiscal cost of the Securities and Exchange Commission’s decision to revoke the licenses of 53 distressed Asset Management Companies is estimated fiscal at GH¢1.5 billion.

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Written by Ghana Newspunch

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