Asiedu-Mante supports autonomy of EXIM Bank
A former deputy Governor of the Bank of Ghana (BoG), Mr Emmanuel Asiedu-Mante, has described as unnecessary, attempts to bring the proposed Ghana Export-Import (EXIM) Bank under the Banking Act, where its operations will be regulated and supervised by the Bank of Ghana (BoG).
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He told the GRAPHIC BUSINESS that central bank guidelines, collectively called prudential norms, were only relevant in cases where the institution involved would be taking deposits and lending to the general public.
Once the EXIM Bank would not undertake any of those activities, setting it up under the Banking Amendment Act, 2007, Act 738, would be wrong, the retired Board Chairman of Stanbic Bank said.
“Opinions will differ but the reality is that an EXIM Bank does not need central bank regulation to operate. The risks of its operations will not be that huge or grievous to warrant BoG supervision,” he stated on February 19.
Parliamentary debate
Mr Asiedu-Mante was reacting to a parliamentary debate and discussions in some quarters that the Ghana EXIM Bank, which is expected to be operational by the second quarter of the year, should be brought under BoG regulation.
Discussions on the regulatory framework suitable for the bank ensued at the first reading of the bank's bill, where some MPs questioned the rationale behind the proposal to exempt it from central bank regulation.
Their position was in spite of the fact that all EXIM Banks in the world are set up outside the banking legal framework, thereby making them autonomous of central bank controls.
The Ghana EXIM Bank Bill, which was drafted seven months ago, proposes such an arrangement – the bank should be autonomous of the BoG and the Finance Minister given oversight responsibility on its operations.
Although the proposal was based on the global standard, it has been met with sharp criticisms. The critics contend that because of the need for policy credibility and investor confidence, the EXIM Bank should be insulated from direct state control, and rather be supervised and regulated by the central bank.
"It is the BoG that this House (Parliament) has given the power to regulate any financial institution, not the Finance Minister. So, why should the EXIM Bank be treated differently," the MP for Manhyia and a ranking member of the Finance Committee, Dr Mathew Opoku Prempeh, asked on the floor.
His position was, however, countered by the MP of Old Tafo, Dr Anthony Akoto-Osei, who explained that global best practices require that an EXIM bank is insulated from central bank controls.
This, he said was needed to give it some flexibility to engage in transactions commercial institutions will typically not be interested in.
Exemptions
In a reaction, Mr Asiedu-Mante said the exemption applied where the institution involved was not exposed to the risks the BoG was set up to guide against.
"Yes, we have a Banking Act that regulates all financial institutions but there must be exemptions. This is not an institution that will take deposits and it will not do commercial lending like the others; this is a special institution to promote exports and support viable commercial projects," he explained.
He further disagreed with suggestions that allowing the Minister of Finance to exercise oversight responsibility on the bank would reduce its effectiveness, explaining that what mattered was a credible policy guideline, not the institution that regulated its operations.
Global practice
Currently, almost all EXIM Banks globally are exempted from central bank controls, with the majority of them being under the finance ministries of the countries concerned.
For example, the EXIM banks of Britain, Korea, Canada, Indonesia, India, Thailand and the United States of America are exempted from central bank prudential norms, making it possible for their finance ministers or their appointees to exercise that oversight.