Govt releases GH¢700m bailout funds - To pay defunct financial institution customers
The Ministry of Finance has processed the release of the first tranche of GH¢700 million of the additional GH¢1.5 billion bailout funds for customers of defunct financial institutions.
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The bailout would enable the Securities and Exchange Commission (SEC) to pay customers of the defunct companies, including Blackshield Fund Management Ltd.
Addressing the media at its Monthly Economic Updates yesterday, the Minister of Finance, Dr Mohammed Amin Adam, said he had instructed the Controller and Accountant General to release the funds to mitigate the stress on affected persons.
The 2024 Mid-Year Review of Fiscal Policy presented in July 2024 indicated that Cabinet had granted approval for the disbursement of an additional GH¢1.5 billion to provide relief and bailout for those whose funds had been locked up in the failed fund management companies.
Dr Amin Adam said the GH¢1.5 billion would be released in three tranches, adding that the amount would bring the number of investors to be fully settled under Blackshield to 82,096, representing 92 per cent, and 12,069, representing 78 per cent of the rest of the failed companies.
“This will bring the total number of investors fully settled under the bailout scheme to 94,165 (representing 90 per cent) out of the total validated claims of 105,178. 28,” he said.
“This intervention is being done despite the tight fiscal space, evident of Government’s commitment to provide relief to investors of the defunct companies especially the pensioners,” Dr Amin Adam stated.
State of economy
As part of the update on the economy, the Finance Minister said the economy continued to make good progress on its macroeconomic stability and growth agenda.
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Dr Amin Adam said the progress being witnessed transcended macroeconomic stability and growth to include significant improvement in social protection.
Data from the Ghana Statistical Service indicates that the economy grew by 4.7 per cent in the first quarter of 2024, compared with 3.1 per cent in the corresponding period of 2023.
The Minister of Finance said although half-year Gross Domestic Product (GDP) data had not been released yet, recent data on Composite Index of Economic Activity (CIEA) published by the Bank of Ghana indicated a sustained pickup in economic activities.
The real CIEA recorded an annual growth of 3.3 per cent in May 2024, up from 2.1 per cent in Q1 of 2024, compared to a contraction of 3.7 per cent in May 2023.
Dr Amin Adam said to protect the poor and vulnerable during those challenging times, the government had provided more resources for well targeted social interventions, including the Livelihood Empowerment Against Poverty (LEAP) Programme, the National Health Insurance Programme (NHIS), the Ghana School Feeding Programme (GSFP) and the Capitation Grant Programme.
“Benefits under the LEAP programme have been doubled, first in 2023 and then in 2024 following the indexation of the benefit to inflation since this year,” the minister said.
“Specifically, the transfers for the LEAP Programme increased from GH¢5 million in 2016 to GH¢428.8 million in 2023. This has further been increased to GH¢720 million for the 2024 financial year,” he said.
Inflation
Dr Amin Adam also stated that the strong disinflation process which started in 2023 continued to show further progress in response to the Bank of Ghana’s tight monetary policy stance, the strong fiscal consolidation efforts and the improvement in exchange rate stability.
Inflation declined to 20.9 per cent in July 2024 from 22.8 per cent in June 2024, mainly on account of deceleration in both food and non-food inflation.
The Finance Minister said the cedi relatively had stabilised against major trading currencies since 2023, although it experienced some recent pressures which had since subsided.
Fiscal consolidation
Dr Amin Adam, who is also the Member of Parliament for Karaga, said the fiscal consolidation programme was progressing smoothly as the government continued to rein in its public finances towards achieving fiscal and debt sustainability.
He said provisional fiscal data for January to July indicated that total revenue and grants at the end of the period amounted to GH¢89.4 billion (8.8 per cent of GDP), 0.7 per cent above the programmed target of GH¢88.7 billion (8.7 per cent of GDP).
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Total expenditure (commitment) also amounted to GH¢114.1 billion (11.2 per cent of GDP), 2.8 per cent below the budgetary provision of GH¢117.4 billion (11.5 per cent of GDP).
The overall budget deficit (on commitment basis) was GH¢24.8 billion (2.4 per cent of GDP), as against the target of GH¢28.7 billion (2.8 per cent of GDP) and the deficit of 2.8 per cent of GDP recorded in the corresponding period of 2023.
He said the primary balance for the period was, therefore, a deficit of GH¢3.8 billion (0.4 per cent of GDP), as against the deficit target of GH¢3.5 billion (0.3 per cent of GDP).
Debt update
Providing an update on public debt, the minister said as of July 31, this year, the country’s provisional nominal central government debt stood at GH¢761.1 billion, equivalent to $51.1 billion.
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He said that represented a nominal increase from the previous GH¢587.7 billion, equivalent to $53.5 billion.
The increase in cedi terms and decrease in US dollar terms were attributed to a combination of factors, including cedi depreciation, disbursements from multilateral institutions and domestic financing of the budget.
“I am pleased to announce that the government is fully on track to achieve its debt targets under the International Monetary Fund (IMF) programme,” Dr Amin Adam said.