Mr Speaker, the fiscal impact adds up to about GH¢16.4 billion. The question, making the rounds is; could we not have alternative uses for this funding?
Mr Speaker, however, I would like to make references to some commendations by the IMF regarding these interventions; that the banking clean-up was timely and necessary, and that it also provides for stability and confidence in the banking sector.
I would like to end by quoting the Director of the African Department of the IMF who says:
“The alternative to not clean-up could be a bigger cost on the budget and the economy, and this could cause a disruption in the entire economy.”
Mr Speaker, with these few words, I would like Hon Members to support the Motion on the Floor that we approve the Budget Statement for the year, 2020.
Mr Speaker, thank you for the opportunity.
(NDC -- Cape Coast South): Mr Speaker, thank you for the opportunity to contribute to the debate.
I want to focus my debate on the financial sector development, especially the banking sector collapse. I would want to touch on page 50, paragraphs 219, 220 and 224 of the Budget Statement.
Mr Speaker, I am not quite sure what the Hon Minister for Finance is trying to do, but he is asking this House to approve GH¢800 million. On paragraph 224, he is also asking us to approve GH¢2.2 billion which is a --
Now, as my Hon Colleague, Mr Isaac Adongo said, this is actually to replace the sovereign issue that is in court, which I would not want to speak about. However, what has been put in place of is even more diabolic than what was there before.
Mr Speaker, the question I would ask the Hon Minister for Finance is, if he would do a Put-Call Option between Government of Ghana and GAT? That actually is not right because he cannot do a Put Call Option to entities that are not mutually exclusive. The Government of Ghana
and GAT are pretty much the same, and so if there is a Call on the Government side and there is a Put on GAT, then who would make the decision on whether or not to trigger the Call or trigger the Put.
So, basically, this cannot be done; but if he wants to do it by doing GAT versus the investors, then why is he here to seek an approval because this House does not actually recognise GAT. Mr Speaker, basically, this has no business here and this House cannot approve the Gh¢800 million as well as the GH¢2.2 billion he is asking for.
Mr Speaker, as my Hon Friend said, this is still a loan because we still have a contingent liability on it, so it cannot be brought here as completely different.
Mr Speaker, in any case, if he is looking for money for NIB -- they are saying that the banking sector is doing well, but the banking sector is actually still on its knees because it is not well capitalised. The problems we are facing in the economy at the moment is as a result of the liquidity challenges that we have.
So, if the bank is on its knees and he wants to put GH¢2.2 billion in it then, it does not really make sense because in the end, if the idea is to refocus NIB and make it a specialised bank to really deal in industrialisation, then we do not actually need a universal license. Mr Speaker, so, he should down-grade the universal
license of NIB and make it an ordinary bank whether a commercial bank, investment bank, or development bank so that it would not be exposed to the GH¢400 million that the Central Bank is asking as capital requirement. The capital requirement of GH¢400 million applies only to universal banks, so if we would recapitalise the NIB and in the end make it a specialised bank, then there is no point in that bank being how it has been structured.
Mr Speaker, again, I am not quite sure what the Ministry is trying to do with GAT because we are not sure who the shareholder is. The share- holder is the Government of Ghana, and so what exactly are we trying to do because GAT simply has to take money from government and put into these banks that we were told were actually the solvent banks.
Mr Speaker, they have collapsed banks that actually needed help and they have put in place banks that they claim are doing well, yet they are not able to meet the capital requirements. Mr Speaker, in the last two years, nine universal banks have been collapsed, 347 micro-finance institutions, 39 micro credit institutions, 15 savings and loans institutions, eight finance houses, and recently, we have collapsed 53 fund managers. If we put all together, we have actually collapsed
437 financial institutions; small, medium, and large, within a short span of two years, and we are saying that the banking sector is doing well. How can the banking sector be doing well when we have collapsed these many banks? It is not surprising that the economy is facing the difficulties at the moment.
The economy is liquid, yet they are saying that they are putting moneys in the pockets of people, but would we not know if we have moneys in our pockets? Do we need the Government to tell us that we have money in our pockets? They have not paid the depositors that they say they are protecting. So moneys are out of the pockets of depositors and all the people who have been laid off in the banks have lost their jobs, and there are no moneys in their pockets, yet they are saying that they have put GH¢12.2 billion in their pockets.
Mr Speaker, I think that the government ought to do something about this whole banking crises. It would take a while for us to see the full impact of what has been done. Usually, policies like this would take about two or three years for the full impact. Within the next two years, we would see a worse banking system than what we have today because the collapse of the banks by the Ministry and Central Bank has created a systemic risk in the banking sector. For