Finance Minister, Seth Terkper
The government of the National Democratic Congress (NDC) has admitted that it does not have money to pay its workers and therefore has been borrowing from the money market at high interest rates.
The situation has caused it to dip its hands into the budget allocations of ministries, departments and agencies (MDAs) to settle its employees.
The financial situation, which has reached crisis point, pushed the government to authorize the Controller & Accountant Generals Department to collect some GHC500 million from the accounts of 23 MDAs – though they are cash-strapped – to pay workers’ salaries for September 2016.
The Ministry of Finance, in a statement justifying why it relied on funds of MDAs, said, “It would have cost government about GHC9.2 million at the Treasury Bill rate of 22 percent for one month if the Ministry were to borrow GH¢500 million from the market.”
The ministry’s statement, signed by Patrick Nomo, Acting Chief Director, was in response to a publication in Daily Guide’s edition of September 14, 2016, which the ministry said “created a wrong impression that Government does not have money to pay salaries of its workers for September 2016.”
Explaining further why government dipped its hands into the coffers of the MDAs, Mr. Nomo claimed, “The facts of the case are that the Ministry of Finance on August 24, 2016, through the Controller and Accountant Generals’ Department (CAGD), authorized the Bank of Ghana to transfer funds from the accounts of some selected MDAs/MMDAs under government’s Treasury Single Accounts (TSA) policy.”
He said under the TSA and the Bank of Ghana’s zero financing policy of government, the ministry considered the consolidated bank balances of government so as to determine the cash position and through that identify any idle funds to utilize before going to the market to borrow money at an interest cost.
He said, “Government’s position, based on the TSA on the said date, showed that some accounts of MDAs/MMDAs had some balances and therefore decided to utilize such funds as the first option instead of borrowing funds from the market at an interest cost.”
Mr. Nomo said the monies were not used only for salaries as government, through its prudent cash management policies, had opened a Compensation of Employees account at the Bank of Ghana into which funds were transferred consistently throughout the month to meet salary obligations at the end of the month.
“It is, therefore, not true that government was in dire need of money and therefore had to transfer monies from the accounts of MDAs to pay salaries,” he claimed.
Mr. Nomo added that the Controller & Accountant Generals Department had since reimbursed those accounts which needed the funds as a result of the transfers, adding, “It is therefore not true that the decision of government has affected the operations of the MDAs/MMDAs.”
