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16 July 2016

Gov’t’s indebtedness collapsing 11 commercial banks

TerkperSome 11 Commercial Banks in the country could soon fold up if steps are not taken to clear the huge debts owed them by some state-owned institutions.

A Majority of the banks that could be collapsing as a result of this development are reported to local banks.

This issue came up in October 2015 after two of the accounting firms commissioned by the International Monetary Funds (IMF) to measure the current status of the banks in the country made some recommendations.

Chief among them is that steps should be taken to recapitalise these banks to prevent them from going under.

Finance Minister, Seth Tekper in a recent interview with the Daily Graphic noted that for instance, the IMF is demanding work to be completed on a strategy to recapitalise some of these banks.

As part of what Mr Terkper describes as new conditions, the Funds is pushing before the executive board of the Fund meets to review Ghana’s performance under the program.

For some industry analysts and banks that JOY BUSINESS has spoken to, they say the challenge has come about after some state institutions especially those in the energy and power sector to pay loans granted to them on time and even some private firms that have rendered services to government but have not been paid.

Some financial analysts also intimated that they find this development interesting following recent report by the Bank of Ghana (BoG) that  commercial banks in the country are in a sound position following two stress test carried out.

Some state institutions also argue that they are not able to pay these loans because government is owing them.

Another group of another say even if these banks do not go under, the development could result in interest rates shooting through the roof as some banks try to pass on the delays in paying these loans to new borrowers.

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