Bank of Ghana Explains ?900 Billion Overdraft

A TOP official of the Bank of Ghana yesterday broke the bank’s silence over the controversial ?900 billion overdrawn government account.

The official, Mr Gyebi Donkor, Banking Department Head, said in an interview that over ?600 billion of the amount was for crude oil imports, effected between September and December last year when banks in the country were not prepared to lift crude oil for the Tema Oil Refinery.


He explained that the transaction for the crude import was so structured on the instruction of the Governor with the Ghana Commercial Bank in such a manner that there was no way it could have exerted inflationary pressure on the economy.


Mr Donkor said the Governor made it clear that “the transaction should be held in a margin account with the GCB and be isolated from the money supply system”.


Consequently, he argued that any suggestion that the transaction could have fuelled inflation has no merit because it never flowed into the system. Indeed, the account also attracted interest.


The request for the support came from the Controller and Accountant General’s Department when no bank was prepared to support the lifting of crude oil into the country.

Under the circumstances, the Controller’s office quickly sought help from the Central Bank. Mr Donkor questioned why Mr Victor Selormey, former Deputy Finance Minister, claimed he did not know about such overdrawn transactions and indicated that the Deputy Minister signed a promissory note of $13.5 million covering one parcel of FORCADOS crude oil.


In all the seven tranches of the import, the Controller and Accountant General’s Department copied the Finance Minister, the Governor of the Bank of Ghana and the Mines and Energy Minister. They were all debited against Government account .


The seven tranches, totalling ?605,730,975,400, were effected. The break down is as follows: in September, ?98 billion; in October, ?70.6 billion, and the third tranche, also in October, ?106.9 billion. In November, there were three tranches — ?62.6 billion, 98.4 billion and ?99.8 billion, whilst the final tranche of ?69.2 billion was in December.


Mr Donkor noted that apart from the crude oil import, more than ?250 billion discretionary payments were effected. Those payments were effected without making reference to government’s financial position at the Central Bank. Such payments were made at the regional and district treasuries after which the cheques were forwarded through the clearing systems.


He submitted that it was because the bank saw the huge growth in the overdrawn government account that it advised the Finance Ministry to conduct a thorough audit into various government accounts.

He said the bank has never said it was unaware of the ?255 billion. But it wanted to know the nature of the transaction to enable it to determine whether they were legal or not.


The Bank recommended that there should be complete inventory of all government accounts, including those held by ministries, departments and agencies.


In addition, it suggested that government debt portfolio covering direct borrowing and government guarantees should also be audited.


Furthermore, the bnak directed that the Controller and Accountant General‘s Department’s fuel operations account and transfer of foreign missions should be audited.


It was anticipated that the audit would be completed before any pronouncement would be made on it, he said, and expresed regret that this was not so.