Prime News Ghana

Parliament defers the passage of GAT's GHC2b sovereign guarantee

By Justice Kofi Bimpeh
Parliament of Ghana

Parliament has on Wednesday, March 13 deferred the passage of the GHC2 billion sovereign guarantee for Ghana Amalgamated Trust (GAT).

The house at the conclusion of the debate on the report of the Finance Committee which recommends the approval by majority decision was not having the required number by law to approve the guarantee.

The Sovereign guarantee when approved will help the special purpose vehicle created by government, GAT, to raise GHC2 billion to help recapitalised some five local banks.

Read also: GAT: ADB, others to list on stock market

The five local banks are ADB, UMB, Prudential NIB and OmniBSIC.

Minority in Parliament has disagreed with the passage of the sovereign guarantee despite the explanations given the Finance Minister, Ken Ofori Atta.

MP for Bolgatanga Central and member of the Finance committee, Issac Adongo on the floor of the House said: "Mr Speaker you want to give that money to someone for 5years all you have as a fallbank is GHC2 billion gurantee, you are not even sure the investment at the end it will give you and yet you have been promised 21% over a period of 5years, a zero-rated bond simply means that you will not be collecting this 21% until five years, even if i don't know finance i will go and buy a government bond of 25years for 20%, every six month i will collect my interest for 20% and i will invest that again for another 20%, by the time i rollover this invest for 5years i will have garner almost 5.9 billion so why will i go and waste my money for an investment that will give me 4.1 billion."

Explaining to the house about GAT, Ken Ofori Atta said the local banks to be recapitalised under the Ghana Amalgamated Trust (GAT) will be asked, as part of strategies considered to ensure the GHC2 billion being invested in them is secured, to list on the Ghana Stock exchange.

According to him, the banks will be encouraged to merge as part of the outlined strategies being considered to make sure the funds invested in the banks are secured and can be monitored. Ghana News