Government has started moving state funds held with commercial banks to a dedicated account at the Bank of Ghana as the implementation of single Treasury Account begins.
The movement, which started this July, is part of plans to improve management of state funds.
Projected value of these accounts
An audit carried out last year puts the value of funds held by commercial banks at a little over ¢6 billion with the last count showing the number of individual government accounts at around 6000.
Reasons for the introduction
According to government, it has started implementing the single Treasury Account to help better manage public funds. It also wants to deal with corruption; waste and to let managers appreciate the total amount of funds in the state coffers.
Further, goverment wants to use the policy to encourage banks to lend to the private sector as most of the banks depended on the government’s funds to improve their liquidity and even buy treasury bills.
While some argue that moving these funds could force the banks to be innovative to grow their loan books, others say managers want to use the policy to also check government’s expenditure.
The Public Financial Management Act 2016 (ACT 921) requires government to set up this account.
According to the Act, the account is to serve as a unified Structure of government account to give a consolidated view of government cash and resources, including money received by covered entities shall be deposited
Economist Dr John Kwakye told JOYBUSINESS that government must move cautiously with this policy because it could cripple the operations of the some of the banks. He rather wants government to stagger the implementation of the policy.
So far, there have been mixed reactions to the policy. Whiles some banks have welcomed the initiative others think that it could affect the operations of banks.
Managing Director of Royal Bank, Osei Asafo-Adjei told JOYBUSINESS he does not think the move is a good decision, “because government is the biggest spender in this country and our economy is not adequately diversified when it comes to liquidity and resources”.
“I feel that in other to support the banking industry, which is very an important segment of our economic development, banks should be allowed to bank some of the MDA’s rather, rather than concentrating on government account at the bank of Ghana which would not be helpful,” he added.