Another Banking Sector Crisis Looms – Kwesi Pratt Hints and Causes Stir

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The Minister for Finance, Ken Ofori Atta would have to respond to some pressing concerns veteran journalist and the Managing Editor at the Insight newspaper, Kwesi Pratt Junior has raised about the funding for the Ghana Priority Health Infrastructure Projects; Agenda 111.

According to him, the lack of a clear financial arrangement to sustain a project of such magnitude could plunge the banking sector into distress.

Mr. Pratt feared another wave of banking sector clean-up looms given that local contractors that would be sourced for the execution of these district and specialized regional hospitals will be highly dependent on local banks for credit so they can execute the project.

On Pan African TV’s morning show today, the veteran journalist indicated that the only funding provided for the projects is just a hundred million United States Dollars ($100,000,000.00), an amount he described is woefully inadequate.

He noted that the quantum of money required though had been estimated by the government, it had failed to provide and justify available sources of funding such that local contractors could have some confidence to take the risk of bidding for these projects.

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He stressed that unlike the Tema Motorway expansion project which has a dedicated funding mechanism, the Agenda 111 initiative is simply hinged on ‘nothing’.

The disappointment he expressed was that the government opted for a foreign contractor to execute the Tema Motorway project which has the entire funding requirement secured, leaving indigenous Ghanaian contractors to the risk their debt portfolios with the Agenda 111 initiative.

He lamented the outcome of that decision could bring dire consequences on local contractors and the banking sector, should the Minister for Finance and for that matter government, fail to provide some guarantees and the needed capital to sustain the project execution.

“If care is not taken, we are going to get into the same situation which led to the banking sector reform because these contractors are going to take loans from Ghanaian banks to start the project. There is no guarantee that they will be reimbursed.

 

“There’s going to be a huge hole in the accounts of the banks. The banks are going to suffer a liquidity problem as a result. Are we going to do another banking sector reform?” Mr. Pratt questioned.

 

It has been reported that about $6 billion is being raised by the Ministry of Finance to support this initiative, however not much had been detailed to the public nor parliament for consideration. In the coming months, as the necessary financial arrangements are concluded, Mr. Ken Ofori Atta and the Minister for Health will surely come out to educate the public on the funding secure.

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It is expected that the choice of funds would not exacerbate the already overwhelmed national debt.

 

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