The Ministry of Finance and Economic Planning has released GH¢596.1 million to settle arrears that stood on government books as of the end of December 2010, including arrears to 137 road contractors.
The arrears relate to unpaid invoices and certificates for various works executed before December 2008, as well as delayed transfers to statutory funds.
A total of GH¢221.8 million went to road contractors, with the remaining GH¢374.3 million being used to fully settle statutory transfers, namely, the Ghana Education Trust Fund (GETFund), the District Assemblies Common Fund (DACF) and the National Health Insurance Fund (NHIF).
While the amount for statutory payments represents the full settlement of arrears for the period ending December 2010, that for road contractors covers 70 per cent of the outstanding debts, some of which date back to 2008.
The payment to the statutory funds is made up of GH¢141.8 million for the GETFund, GH¢116.7 million for the DACF and GH¢115.8 million for the NHIL.
The Minister of Finance and Economic Planning, Dr Kwabena Duffuor, told the Daily Graphic in Accra yesterday that with those payments the government was now current on transfers to statutory funds as required by law, stressing, “The government’s outstanding statutory liabilities in respect of transfers to statutory funds have been fully settled.”
He promised that henceforth the government would ensure a timely transfer to the statutory funds.
The payment to road contractors benefited 18 foreign and 119 local contractors, with Dr Duffuor explaining that it was to improve cash flow for the contractors and also assist them to reduce their indebtedness to the banking sector.
Although operational risks, high overheads and the locking up of funds in fixed and term investment instruments contribute to higher interest rates, the banks have attributed high interest rates mainly to high bad debts accruing mostly from road contractors.
The payment of over 70 per cent of arrears owed road contractors, majority of them local, coupled with the Central Bank’s decision to maintain its policy rate at 13.5 per cent, should bring interest rates down in the next few months.
The Finance Minister said the government would continue to clear such arrears in line with its commitment to efficiently manage the domestic debt stock.
Last year, the government retired GH¢445 million of the debt the Tema Oil Refinery (TOR) owed the Ghana Commercial Bank (GCB). Creditors in the road and energy sectors were also paid GH¢510 million last year.