The National Democratic Congress Member of Parliament for Bawku
Central, Mahama Ayariga, has urged the Governor of the Bank of Ghana, Dr
Ernest Addison, to make concerted efforts to stop the possible collapse
of the financial sector and the unjust takeover of indigenous private
banks due to the implementation of the domestic debt exchange (DDE)
programme.
He contended that the DDE programme would emasculate domestic private
banks as they would face capitalisation and liquidity problems, given
that they would not receive timely and appropriate coupon payments from
their bondholder, the Government of Ghana.
He also said the directive of the Minister of Finance, Ken
Ofori-Atta, to those banks to approach the Ghana Amalgamated Trust Plc
(GAT) for support from the Ghana Financial Stability Fund (GFSF) would
open them up to a takeover by investors in the GAT, if the GFSF was not
wholly publicly funded.
I further contend that political patronage and nepotism will inform
the ultimate purchase of the shares in the private banks once GAT begins
to dispose of these shares to realise the investments made in those
banks (if GAT is not publicly funded), he said.
Illegal and unconstitutional
In a letter, dated January 30, 2023 which he wrote to the Governor of
the BoG, Mr Ayariga, said the policy and strategic options chosen by
the Finance Minister enabled the illegal and unconstitutional
expropriation of the private property of the present owners of domestic
private banks and, possibly, private international banks operating in
Ghana.
I call for the mobilisation of the available intellectual
competencies and political forces to defend the bona fide property
rights of owners of private banks in Ghana. Not to do so with a sense of
urgency will constitute the greatest dereliction of duty of our
political class.
And the collapse of present owners of these banks and the takeover
of these banking interests, similar to what was orchestrated in the PDS
saga and the intended Agyapa deal, will capriciously, unlawfully and
criminally transfer enormous wealth and concentrate it in the hands of
those who might enjoy the patronage of the Minister of Finance. This
could disorient our democracy and potentially destabilise our politics.
The history of the recent banking sector cleanup remains fresh in our
memory, he said.
The letter was also copied to the Chief Executive (CEO) of the Ghana
Bankers Association, the CEO of GAT, the Speaker of Parliament, the
Attorney General and the Minister of Justice, the leadership of
Parliament, the board chairmen of all banks in Ghana as well as the
Country Director of the World Bank office.
Background
Shedding light on the background informing his letter to the BoG
Governor, Mr Ayariga recalled the Finance Minister announcing a debt
restructuring programme involving a debt exchange by government domestic
bondholders.
He said Ghanas total external debt stood at about GH383 billion as
of November 2022. Domestic debt constituted GH195 billion, with the
total debt, therefore, amounting to GH578 billion in November 2022.
Banks in Ghana, he said, held about half of the entire domestic bonds
of the Government of Ghana and individuals held 11 per cent of the
government bonds.
He recalled how the Minister of Finance had compelled domestic banks
to voluntarily engage in a debt exchange with the government in
relation to the bonds they held.
This involves reduced coupons and deferred payments. Definitely, the
liquidity, solvency and capitalisation of these banks will be
negatively affected.
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