Financial sector cleanup cost won’t exceed GH¢16.8 billion – Ofori-Atta

Finance Minister, Ken Ofori-Atta has expressed optimism the cost of cleaning the financial sector crisis will not go beyond the estimated GHS16.8 billion.

Already, GHS12.6 billion has been spent on depositors whose monies were or have been locked up following the revocation of the licences of some nine local banks, 347 microfinance firms, 23 savings and loans companies as well as finance houses and 53 fund manager, leaving an outstanding GHS4.2 billion.

The outstanding debt will be largely used to take care of depositors in the savings and loans and microfinance sub-sectors.

Former President John Mahama, in a recent interaction with Ghanaians on social media, said the cost of the banking sector is actually GHS28 billion.

But speaking to Bloomberg TV in an interview, Mr Ofori-Atta said: “It’s totally Ghanaians cedis, about GH16.8 billion; we have already done 12.6 billion, leaving maybe US$1 billion in change which we should be able to support so that we take care of the other depositors. So far, we have help and we should be able to do that.

Bloomberg had earlier projected the cost of the financial sector cleanup to escalate to GHS20 billion cedis ($3.5 billion).

It linked the increase to the government’s consideration to increase the guaranteed payback for some depositors.

The Bank of Ghana previously guaranteed 100% of the funds deposited at the banks, but only for as much as 20,000 cedis per person for customers of failed second-tier lenders, known as savings and loans companies.

The cleanup of the finance sector followed years of poor governance and weak regulatory oversight that risked the savings of about 4.6 million depositors.

While the bailouts helped to stabilise the industry, it also added to Ghana’s debt that rose, according to estimates, to 63% of gross domestic product by the end of 2019 from 59% the year before.