About three critical legislations enacted by Parliament to guide the financial services sector and the management of public funds are set for amendment less than seven months into their passage.
The laws: Public Financial Management law, Banks and Specialized Deposit-Taking Institutions law and the Deposit Protection laws have all been penned down for amendment in the first quarter of next year after the International Monetary Fund (IMF), which is helping the government to manage the economy under a US$918 million budgetary support programme, revealed cracks in the laws, which the fund says could inhibit attempts to minimize financial stability risks and protect public purse.
As such, the Fund, which has signaled its intentions to not tolerate weak financial systems and breaches, is putting increasing pressure on the government and the Bank of Ghana (BoG) to ensure that the deep holes in the laws were fixed in line with efforts to build trust and confidence and market integrity in the country’s financial system as well as to protect public funds.
Commenting on the Banks and Specialized Deposit-Taking Institutions law and the Deposit Protection laws the IMF said: “The two bills strengthen BoG’s ability to safeguard financial stability, through enhanced powers to resolve banks that are deemed to be unviable and a new deposit insurance scheme that will provide protection to small depositors in the event of resolution.
“However, some weaknesses in the laws warrant further amendments to fully enable the authorities to minimize financial stability risks in case of a bank failure. The authorities have committed to seek Parliamentary adoption of appropriate amendments to the laws, in consultation with IMF staff, by the end of the first quarter of 2017.”
Turning its attention to the Public Financial Management (PFM) law, the Fund added: “The new PFM act adopted by Parliament in August is an improvement over existing PFM laws. It expands coverage of the law; enhances fiscal reporting and transparency requirements; improves provisions on the budget preparation process, commitment controls, and the role of audit committees; and introduces explicit debt and cash management provisions.
“However, it contains a number of weaknesses. While the new law introduces fiscal responsibility principles, the lack of a parliamentary approval of the fiscal strategy document and the fiscal rules and the lack of publication requirement represent a significant shortcoming in terms of enhancing accountability. The authorities indicated that they will address these weaknesses in 2017, if needed through amendments to the Act.”
The IMF is expected to use the next review and subsequent tranche package to Ghana as bait to coerce government to push through the necessary amendments that the Fund crave.
However, the weaknesses identified in the newly enacted laws are likely to be seen as an embarrassment to policy and lawmakers who rushed the bills through parliament in order to satisfy key conditions set by the Bretton-Woods institution as a perquisite for the approval of the third review of the programme and the subsequent release of the much-needed inflows to support the budget.
The remarks of the IMF contained in the latest Ghana country report also vindicates the position of public accountability and anti-corruption crusaders who launched fierce criticism at the government and legislators for sponsoring and overseeing the passage of the laws after few weeks of consultations and deliberations.
A former chair of the Public Accounts Committee (PAC) of Parliament, Albert Kan-Dapaah, after the passage of the PFM argued that the law was porous, which leaves the nation’s coffers at the mercy of corrupt public officers to fleece.
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