Business News Fri, 11 Aug 2017

Treasury Single Account to reduce government's borrowing – Ofori Atta

Government is hopeful the operation of a Treasury Single Account (TSA) should reduce its borrowing in the long term.

The move which has seen the moving of some monies in accounts at some commercial banks is aimed at strengthening the financial sector where government borrows less to crowd out the private sector businesses.

Under the TSA, government will be closing the 15,172 bank accounts.

These accounts are being operated by the various Ministries, Departments and Agencies (MDAs) as well as the various Metropolitan, Municipal and District Assemblies (MMDAs).

This is to be replaced with a single account to be managed by the Bank of Ghana.

But speaking at the official launch of the TSA on Thursday, Finance Minister, Ken Ofori Atta explains the move will also ease out credit to the private sector due to the reduced government borrowing.

“In moving the money to the central bank, the impact is minimal however if you go through the 33 banks there were seven banks that seem to have a disproportion of their deposits, being from the central bank and MDAs and those are the ones who will be most impacted that we have to work with them on one tier basis,” he stated.

Responding to concerns over the strengthening of the banks to meet the potential liquidity shortfall, Mr. Ofori Atta assured that the issuance of the energy bonds should bring some respite in addressing such.

“With the issue of liquidity, the banks are essentially saying that you have the energy loans that are outstanding which government acquired responsibility for and therefore how can they be cured?”

“That is why we are coming up with our energy bond and hope that we will relieve them. Also the budget director at the ministry of finance is from next week going to accelerate payment of arrears and that should also bring some liquidity,” he further asserted.

Banks appeal for fast pace payment of 6 billion cedis debt

Meanwhile the Ghana Association of Bankers want government to expedite processes to pay all outstanding arrears owed them to sustain their operations.

They argue that the continuous delay in repaying such loans is also inhibiting their ability to offer further loans to the private sector businesses.

The President of the Ghana Bankers’ Association, Alhassan Andani tells Citi Business News clearing the over 6 billion cedis debt due banks should revive activities in the sector.

Source: citifmonline.com