Professor Godfred Bokpin

An Economist, Professor Godfred Bokpin, has reiterated that the financial sector cleanup by the Bank of Ghana (BoG) was necessary.

The full professor at the University of Ghana, Legon, was responding to beliefs held by the Minority in Parliament that the cleanup exercise was unnecessary and that the ailing financial institutions could have been bailed out with less money than was used in the exercise.

The Minority also holds the belief that the government had intentionally used the exercise to target and collapse institutions linked to the National Democratic Congress (NDC).

But speaking on JoyNews’ Newsfile on Saturday, Prof. Bokpin, said despite the shortcomings of the exercise, he still holds the view that the cleanup was necessary.

“I had held the view before, and I still stand by that that the financial sector cleanup was necessary. And I’ve maintained even on this platform before that the vulnerabilities that crystallised towards the end of 2016 running to 2017 which occasioned the financial sector cleanup had started way back towards the end of 2011, the data is clear, non-performing loans and all of that.

“We had maintained that the first asset quality review that was done in 2015, clearly had indicated vulnerabilities in the financial sector. The decisive responsiveness didn’t come the way they should. You can go through the IMF supported programmes, the 16th IMF supported programme from April 3rd, 2015 to April, 2019. That is clear.

“So we were of the view, and I supported the central bank that a certain level of cleanup needed to be done in order to reposition the financial sector to make it a bit more robust to support economic growth,” he explained.

Prof. Bokpin noted that despite his support for the cleanup, the opacity that characterized the process was very much regrettable especially taking into consideration the large amount of money that was spent on the exercise.

“However, we have also said that given the amount of money that had been spent and the lack of transparency in the financial sector cleanup, raises questions. And we have maintained that this should be independently investigated. Bank of Ghana should have presented overall plan and how much it was going to cost the ordinary Ghanaian, transparency, full disclosure.

“We saw what happened in the case of the US in their financial sector cleanup, the global financial crisis, the relationship between the US Fed, Congress and all of that. That should not be lost on us. And I think that yes, if you look at how much we have spent, the lack of disclosure and transparency and all of that clearly it raises questions about the financial sector cleanup. We will not run from that now and we’ve made that known,” he said.

He said other details coming to light such as the NDC’s affiliation to the alleged targeted and collapsed institutions are worrying.

“I think we should all be bold enough to say we shouldn’t have gone that way; that businesses should be allowed to thrive regardless of which regime is in power. I think that that is very clear,” he said.