Embarrassing blunders a drain on economy
A friend of mine asked me the other day how come that as journalists we get stories to fill our papers every day.
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I remember telling him that one ready source for our stories was the politician, who never ceases to amaze himself or herself and his or her countrymen and women with their ‘amusing behaviour’.
And in an election year such as this, one is assured of an unending stream of gaffes from the politician’s quarters. It is worrying though that some of the embarrassing blunders from that end have a direct impact on the people.
As I reflected on my piece for this week, one incident involving the alleged transfer of $250 million from the vaults of the Bank of Ghana (BoG) to a private bank just kept nagging me.
Even though I am not a banker, it is not difficult to understand that the measure which was undertaken by the Minister of Finance smacks of a deal that even though was done with the best of intentions, has turned out to be unsuitable for our circumstances.
BoG in charge of forex
My take is that the whole transaction is very unusual even though we are being told by the Bank of Ghana and the Minister of Finance that it is nothing strange.
The initial story as exposed by the vice-presidential aspirant of the NPP, Dr Mahamudu Bawumia, had it that the money that was moved was in foreign exchange and contravened Section 53 of BoG Act 612, which mandates the BoG as the only entity to keep charge of forex belonging to the country and no other bank. This, of course, raised the hackles on the necks of people.
The money, we are told, was part of a $1billion Eurobond loan the government had sourced for development projects including the establishment of a Ghana Infrastructure Investment Fund (GIIF), which was yet to take off.
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The money from reports had been lying idle for nearly two years and, therefore, in order to reap some dividend to meet the cost of interest on the loan, the decision was taken to invest it with a private bank.
Prudent planning
Granted that it is the case, it means there was a lack of prudent planning on the part of the managers of the country.
If there was good planning, the GIFF ought to have been put in shape such that immediately the money arrived, it was put to work and not made to sit idle for two years.
What many people do not understand is why the money was given to the United Bank of Africa (UBA), which is a Nigerian bank, and not any of the many Ghanaian banks dotted around.
Another twist that leaves many scratching their heads concerns interest payment on the loan which to non-experts like me, is looking like the country is now paying double for what we went to borrow.
The interest on the loan originally from reports is pegged at 10.75 per cent. The UBA on getting the money, somewhere late last year, quickly bought treasury bills with it thereby attracting an interest from government at 24 per cent.
The catch is that it gave UBA the opportunity to lend the money back to government at a higher rate.
Interestingly, the government is paying interest on the original loan and paying interest on the treasury bills. I stand for correction, if there be any.
BoG investment
The $250 million is such a huge money that the experts agree it has implications on inflationary trends in the country. When there is too much money in the system chasing few goods and services in the country, it brings the value of the cedi down, the experts say.
It is quite ignominious that this matter should come at a time when the President, Mr John Dramani Mahama, was attending a conference in the UK on corruption. It is expected that on his return he will take action on the matter to have it reversed.