The cost of cleaning up the financial sector could cost as much as US$4 billion, which is about GH¢21 billion, Ken Ofori-Atta, Finance Minister has said.
The Finance Minister speaking on the floor of Parliament today said the government had to step in to protect the integrity of the sector as well as protect depositors and save over 3,000 jobs.
“And, let me be very clear here, we were at the precipice of a major fiscal meltdown and let no one indulge in self-serving oratory. The end cost may be anywhere from USD 3 to 4 billion, a poison pill from the previous Government,” he added.
Government has already provided funding of GH¢11.2 billion to secure depositors’ funds in the failed banks. The savings and loans sector is also due for a similar clean-up just as is going on in the microfinance sector were government had provided close to GH¢1 billion.
According to him, many of these failed financial institutions had denied depositors access to their deposits for a long period of time, creating liquidity challenges in the financial system, resulting in a high incidence of credit defaults in the system.
“The threats posed to the stability of the financial system and the economy at large were enormous, justifying the bold actions taken by the Bank of Ghana. The Government has demonstrated its commitment to providing timely relief to depositors whose funds were at risk as a result of the demise of the defunct banks and SDIs.
“Government’s actions have restored confidence in the banking system. Through the Government’s interventions, significant deposits held by some 2,655,100 depositors (1,525, 550 bank depositors and 1,129,820 MFI depositors) have been saved. Over 3,000 jobs have also been saved,” he maintained.
