Bailing out victims of financial scams sends bad signals - Prof Quartey
Professor of Economics at the Institute of Statistical, Social and Economic Research (ISSER), Professor Peter Quartey, has cautioned government against bailing out customers of financial scams in the country.
According to him, government’s decision to pay customers of DKM for the losses they incurred when the company collapsed, will only embolden other victims of similar scams to demand for help from government, and will also threaten governments fiscal position.
The Finance Minister, Ken Ofori-Atta while presenting the 2019 Budget in Parliament, said about 80 percent of funds owed DKM customers had already been settled.
But speaking to Citi Business News on the sidelines of ISSER’s post budget forum, Professor Quartey urged government to make the reimbursement of DKM customers the last time it pays victims of such financial scams.
“The DKM payment is a campaign promise, and from what we heard from the budget Government has already paid the majority. But going forward I don’t think we should encourage that kind of payment. Yes, there is an element of greed. If you recall in the case of Menzgold, the Bank of Ghana came warning customers and the customers rather went on rampage demonstrating and attacking Bank of Ghana. Now that they’ve hit a wall they want the Central Bank to come and bail them.”
He further touched on how the bailout of the collapsed banks has worsened the situation.
“Even the banks, GHC 7.9 billion Ghana Cedis to save them is a lot of money. How much are we allocating to Planting for Food and Jobs, GHC 380 million. How much are we allocating to 1D1F, GHC95 million.
And we are spending GHC 7.9 billion Ghana Cedis to bail out banks. Are we going to do the same for Menzgold?. So the continuous bailouts will certainly have a strain on our fiscal position, therefore we should not encourage those kinds of payments.”
Professor Peter Quartey was speaking on the sidelines of ISSER’s post budget forum held in Accra on December 3, 2018.