Speaker Alban Bagbin

The Speaker of Parliament, Alban Bagbin says the government erred in its clean up of the financial sector.

He said that act is one of the contributory factors for the country’s high debt stock.

According to him, the government could have channelled resources into supporting the indigenous banks.

“It is the focus of every country to ensure they are in control of the banking sector. So if we had Ghanaians with banks having challenges, it is incumbent on us to make them succeed. 

I think our colleagues in government erred in not seeing it that way”, the Speaker said in a media engagement on Sunday.

He added that the government rather ensured Ghanaians doing well in the sector lost out. 

“They tried and ensured that Ghanaians making it in the sector lost out and instead of using about GH¢5 billion to help the banks to survive, we ended up losing GH¢25 billion, and we have still not been able to sanitize the system and there is still a lot of work to be done.”

In a bid to restore confidence in the banking and specialised deposit-taking sector, the Bank of Ghana embarked on a clean-up exercise in August 2017.

Spending over GH¢20 billion, the Central Bank’s action was to resolve insolvent financial institutions whose continued existence posed risks to the interest of depositors.

This was supervised by the now embattled Finance Minister, Ken Ofori-Atta from mid-2017 to January 2020.

The clean-up saw a reduction in the number of banks from 34 to 23, whilst 347 microfinance institutions, 15 savings and loans and eight finance houses had their licences revoked.

While some of the commercial banks were merged to form the Consolidated Bank Ghana Limited, state-owned GCB was allowed to swallow others.

The Securities and Exchange Commission also announced the revocation of licenses of 53 Fund Management Companies.

A number of these institutions were found to have varying degrees of corporate governance lapses.

The total estimated cost of the state’s fiscal intervention, excluding interest payments, from 2017 to 2019 was pegged at GH¢16.4 billion.