Advertisement

Mr Ken Ofori-Atta (right) speaking to some stakeholders at the launch of the TSA in Accra
Mr Ken Ofori-Atta (right) speaking to some stakeholders at the launch of the TSA in Accra

Treasury Single Account launched

The government has begun transferring more than GH¢2 billion of its money lodged with the commercial banks to the Bank of Ghana (BoG) as part of measures to close all government accounts with the banks.

The move is aimed at consolidating all government cash resources in different accounts at the BoG.

Launching Ghana’s Treasury Single Account (TSA) in Accra yesterday, the Minister of Finance, Mr Ken Ofori-Atta, said the consolidation of government accounts would lower actual borrowing, reduce the pressure on short-term yields and ensure that funding for the ministries, department and agencies (MDAs) was met in a timely manner.

So far, the accounts of nine out of the 24 MDAs have successfully been transferred to the BoG.

By early this month, more than GH¢89 million had been transferred from the banks to the central bank.

The nine MDAs had 190 accounts with the commercial banks and bank balances standing in 36 of the 190 accounts have been closed and the funds transferred to the BoG.

The closure of the remaining 154 accounts is yet to be complied with by the banks.

But the Finance Minister said the situation was damaging to the public purse and called on all stakeholders to work together to ensure the implementation of the TSA.

“What is even more worrying is the fact that the government is borrowing at a high cost, while it has positive balances in the commercial banks.

“I keep my money with you and I get five per cent, but you use my money to buy my T-bills and I give you 20 per cent. Something has got to change.

“In effect, the government is borrowing its own money and paying interest on it,” he said.

Locked up funds

Mr Ofori-Atta said it was estimated that there was about GH¢5 billion government money locked up with the commercial banks and transferring it to the BoG would reduce the risk of resorting to central bank overdraft for the government’s expenditure.

“This will reduce the cost of building buffers for cash management purposes,” he said.

 There are concerns that the implementation of the TSA will stifle the banks of funds if the government does not first settle its indebtedness to the banks.

But the Finance Minister dismissed those concerns, saying the TSA did not cover state-owned enterprises (SOEs) that borrowed on their own balance sheets.

He explained that those institutions would continue to do business with the commercial banks.

“Concerns over the energy sector legacy debt will be sufficiently addressed by the Energy Sector Levy Act (ESLA) Bond, which will improve the non-performing loans of the banking sector,” he explained.

He assured the banks that the government planned to influence pension and insurance investment guidelines to provide regular and stable funds.

Debt servicing cost

Mr Ofori-Atta said the government faced the challenge of increasing debt servicing cost and inefficient cash management and budget implementation.

Plans to implement the TSA began in 2007 but the implementation was faced with setbacks due to lack of a legal framework.

Consequently, the Controller and Accountant-General’s Department (CAGD), through the Ministry of Finance, in the last quarter of 2015 put before the Cabinet a memo on the TSA.

The memo was considered and approved by the Cabinet.

The approval of the TSA necessitated the replacement of the Financial Administration Act, 2003 (Act 654), with the Public Financial Management Act 2016 (Act 921) to effectively regulate financial management in the public sector.

The full implementation of the TSA is expected to contribute to the improvement of treasury operation and consequently facilitate better service delivery.

The Head of Revenue and Cash Management at the CAGD, Dr Mohammed Sani Abdulai, gave an overview of the TSA and how it could help consolidate government’s revenue.

The President of the Ghana Association of Bankers (GAB), Mr Alhassan Andani, assured the government that the banks would collaborate to make the TSA achieve its objective.

Connect With Us : 0242202447 | 0551484843 | 0266361755 | 059 199 7513 |