Paying depositors in full unfair to tax payers – IEA

Research Director at Institute of Economic Affairs Dr. John Kwakye says government refunding 100 percent of funds to customers of the defunct financial institutions is unfair to tax payers.

Addressing the media on the highlights of the fourth State of the Nation Address delivered by President Nana Addo Dankwa Akufo-Addo, Dr. Kwakye questioned government’s commitment to making full payments rather than compensating depositors with a percentage.

“Could government have come up with what I call a haircut? Maybe pay 70 percentage out of the total instead of paying all. I know that this may not be a popular suggestion but that is a good way to go.”

He opined that private individuals who choose to take financial risks, must equally be prepared to bear some of the responsibilities for their decision.

Dr. Kwakye indicated that government making a total refund is a political move which is a budgetary cost to all Ghanaians.

“Of course you will hear politicians saying we will pay 100 percent of the deposits but that’s a cost to all of us. It is a budgetary cost to all of us. It is the tax payer’s money that will be used to do all that.”

Dr. Kwakye is therefore urging the country to replicate practices such as the deposit protection scheme to shield customers in case of bank failures.

Full Payment

President Akufo-Addo delivering the 2020 State of the Nation Address said customers of collapsed financial institutions will receive a 100 per cent of their deposits once the validation exercise is concluded.

The Ministry of Finance has released GH¢5 billion, in a combination of cash and bonds, towards the full settlement of all validated claims due depositors of the failed Specialised Deposit-Taking Institutions (SDIs).

They include customers of microfinance; microcredit; savings and loans and finance.

A statement issued by the Public Relations Unit of the Ministry of Finance, in Accra on Monday, said the money was released to the Receiver of the defunct Savings and Loans and Microfinance Companies and the Official Liquidator of the Micro Credit companies through Consolidated Bank Ghana (CBG).