Business News of 2013-12-06

Loan repayment account shows govt's impropriety - Casely-Hayford

Financial consultant, Sydney Casely-Hayford has described as poor, government’s decision to set up a loan repayment account for the country.

The Minister of Finance, Seth Terkper, announced last week that government will soon establish a separate account for funds meant for the repayment of loans contracted by the country.

The initiative is to help ensure transparency in repayment of the loans, while giving international financial institutions an opportunity to track the country’s finances.

But Mr. Casely-Hayford tells Joy Business the decision by government shows a clear sign of mismanagement of the country’s account.

“By deciding to do this, government is classically accepting that, it is not managing the accounting properly. This form of accounting is what I call piggy bank accounting where you want to allocate monies specifically to certain things into certain accounts and use only that money to do the particular thing you have said irrespective of whether you have other issues as well.

“In a generic sense that’s what we are trying to do, so by setting up another account all we are doing is putting additional workload which is not necessary,’’ he reiterated.

According to him, the introduction of the Ghana Integrated Financial Management Information System (GIFMIS) should make it irrelevant for the opening of a different loan account.

“In the GIFMIS system, there should be already a loan account set up for each specific loan that we take; we have a loan debt department which is responsible for monitoring every single loan that we take, looking at the debt profile and making sure we make payments on time so I don’t quite understand, why there has to be a separate need to set up an account to manage and use it to pay out loans doesn’t make any sense to me. I think it’s very, very poor.’’

He says government could be doing much better in promoting transparency in the payments of loans by publishing the country’s loan portfolio.

“It’s about disclosing to the people when payments have been made and monies have been borrowed, that’s what it is; that’s what constitutes transparency. If they set the account up, will they be publishing details in the newspapers, online and everywhere else to the people of Ghana that, this is what has been borrowed and that’s what has been paid; that’s what transparency and accountability is all about,’’ he stated.

He added that the country could take a cue from what exist in other jurisdiction as far as ensuring transparency is concerned saying, “if you want to disclose to people how the monies are being paid, you can always publish a very much detail which is what the World Bank, IDA and most of our donor partners do.”