The Bank of Ghana (BoG) is engaging the government to come out with a plan on how to reduce government’s indebtedness to the central bank.
The 2017 Auditor-General’s report presented to Parliament revealed that the government’s debt stock at the central bank, which stood at GH₵12.3 billion as of 2016, had not been redeemed.
However, when officials of the BoG appeared before the Public Accounts Committee (PAC) yesterday, the First Deputy Governor of the Bank, Dr Maxwell Opoku Afari, said prudent steps would be taken to clear the debt stock.
He explained although the Bank of Ghana (Amendment) Act, 2016 (Act 918) made provisions for the central bank to use profit in the end of year financial statements to reduce the debt stock, that window had not been used because the bank incurred losses.
Dr Afari explained that per Act 918, there was a distribution hierarchy for profit in the annual financial statement such that if after the distribution, there was still profit, it went into reducing the government’s indebtedness to the central bank.
Despite that lifeline to reduce the debt stock, he said the bank suffered impairments from its liquidity support to financial institutions.
“In 2017 and 2018, the Bank of Ghana made losses because of the impairments as a result of liquidity support we gave to the financial institutions prior to 2017. It is this year that the Bank made profit, but in 2017 and 2018, we made losses; meaning that we cannot use that provision in the Act to reduce the debt stock because the 2019 distribution of profit did not get to the point where we could use it to deplete the stock,” he explained.
Responding to a question put to him by the Chairman of the PAC, Mr James Klutse Avedzi, on which other measure the central bank would adopt to clear the debt stock, he said “there could be other ways when the Bank of Ghana engages with the central government”.
Dr Afari, however, said there was a window of opportunity in the delay on the part of the government to clear the debt stock.
“We know that these stocks are interest-bearing so it means that it also strengthens the balance sheet of the Bank of Ghana because the interests are being paid by the government,” he said.
The Deputy Bank of Ghana Governor also said the bank had activated internal processes for an amendment of certain portions of Act 918 to help improve the liquidity of the central bank.
“The Act came into effect in 2016 and it has been over three years of implementing it. We have constituted a team to document some of the implementation issues, especially those that are of material effect and will constitute the need to engage the Ministry of Finance to consider the need for a proposal to amend certain aspects of it,” he said.
Three other state institutions — the Ghana Cocoa Board (COCOBOD), the Public Procurement Authority (PPA), and Venture Capital Trust Fund — also turned up to respond to infractions cited against them in the 2017 Auditor-General’s report.
The Chief Executive Officer (CEO) of COCOBOD, Mr Joseph Boahen Aidoo, and the Deputy CEO in charge of Finance and Administration, Mr Emmanuel Ray Ankrah, intermittently responded to issues raised by the Auditor-General in the 2017 report.
One of the issues had to do with how the state institution incurred a loss of GH₵216 million in 2015 when its revenue went up by 21.3 per cent to hit GH₵7.5 billion.
A Member of PAC and Member of Parliament for Komenda-Edina-Eguafo-Abirem (KEEA), Mr Samuel Atta-Mills, sought to know why there was “a huge loss despite the high revenue”.
Mr Ankrah explained that a multiplicity of factors — including a drop in the gross profit percentage, high export duties, and increase in producer price of cocoa — was the cause.
For instance, he said, the producer price of the economic crop increased from GH₵5,600 per tonne to GH₵6,800, adding that “the more you increase producer price, you incur related costs, notably evacuation cost”.
“The distribution expenses jumped because we paid the government a lot of money in export duties on the production of cocoa beans. The figure increased from GH₵88 million in 2014-15 to GH₵364 million in 2016, representing over 200 per cent,” he added.
Mr Ankrah also said the COCOBOD management had put in place effective credit control system to recover debts for the company.
“We chase our customers on regular basis; we take them to court if need be because these are public monies and we will take serious steps to retrieve them,” he said.
He added that the current management of COCOBOD was enforcing the laws to recover the debts owed the company.
The CEO for Venture Capital Trust Fund, Mr Yaw Owusu Berempong, disclosed that the former CEO of the Trust, Mr Daniel Duku, and two others have started refunding GH¢17.69 million they allegedly stole from the fund.
He said the three accused persons started paying the money after admitting to giving loans to themselves using other companies.
Mr Berempong added that per an arrangement they had with the State, Mr Duku was to refund over GH¢15 million, while his Executive Assistant, Mrs Irene Anti Mensah, and her husband, Mr Frank Aboagye Mensah, were both paying over GH¢2 million.
He briefed the committee that between 2012 and 2015, 205 loans were granted to companies, and about 90 per cent of those loans were fraudulently processed and disbursed.
“And the total principal amount involved was ¢14.7million and interest had accrued on those loans to an amount of ¢42 million.
“For over two years we worked with both EOCO and BNI and the matter was eventually taken to court; six people were charged: Daniel Duku; former Board Member and Former MP for Keta, Richard Larsen; Irene Anti Mensah; Frank Aboagye Mensah; Charity Opoku, an Accountant; and Kofi Sarpong, an Investment Officer,” he said.
He added that two months ago, “three out of the six, that is, Mr Duku and Mr and Mrs Mensah decided to go under the Section 35 of the Court’s Acts [Act 459] which I understand allow them to negotiate settlement and compensation with the AG and plead guilty at Court.”
The Acting CEO of the PPA, Mr Frank Mantey, led the team from the authority to PAC to respond to audit queries in the 2017 Auditor General’s report.