[ 2012-06-12 ]

Duffuor

Speaker Rescues Duffuor

SPEAKER JUSTICE Joyce Bamford-Addo on Thursday
saved the Minister of Finance and Economic
Planning, Dr. Kwabena Duffuor, from possible
embarrassment over the infamous Tema Oil Refinery
(TOR) debt and inconsistent figures of the
District Assemblies Common Fund for the 2009
fiscal year.

The minister had a lengthy argument with the
minority spokesperson on finance, Dr. Anthony
Akoto Osei, and other members of the group as to
whether or not the government needed to seek
parliamentary approval to issue bonds to offset
the TOR debt.

According to Dr. Duffuor, his ministry did nothing
wrong by not seeking parliamentary approval for
bonds which had been issued to raise money to
clear a debt of over GH¢1 billion due the Ghana
Commercial Bank (GCB).

The minister was answering a question from the MP
for Dormaa West, Kwaku Agyeman-Manu, on why
government did not seek parliamentary approval
before issuing bonds to clear the TOR debt.
The minister indicated that since the bonds were
approved in the 2010 budget under the Domestic
Financing Package, there was no need to go back to
Parliament for approval.
However, Dr. Akoto Osei drew the minister’s
attention to Article 181 of the 1992 Constitution,
pointing out that the issue of bonds fell under
the category of loans.

He argued that the terms and conditions of the
bonds should have come before Parliament for
approval.

The two however held entrenched positions,
resulting in a heated argument until Speaker
Justice Bamford-Addo intervened.

She supported the minister’s decision to consult
the Attorney-General about the right procedure on
the issuance of bonds and report back to the
House.

Earlier, Dr. Duffuor told Parliament that in 2009,
government found that TOR was indebted to GCB of
over GH¢1 billion, with serious implications for
both oil refinery and the bank.

He said because the debt was not being serviced,
it had become a huge non-performing asset balance
sheet of the bank, which was also weakening the
balance sheet of TOR.

According to Dr. Duffuor, in order to address the
problem, the government issued a three-year bond
of GH¢445 million in March 2010, the proceeds of
which were used to pay GCB.

Government, again in April 2011, he added, issued
a three-year stock certificate to the bank for the
remaining GH¢572 million, following an agreement
reached between the bank and government.

Dr. Duffuor said the “securitization exercise
involved the transformation of a non-performing
asset in the books of GCB into an asset that could
generate some interest income to improve GCB’s
balance sheet”.

He explained that the transactions were undertaken
to reduce the risks associated with GCB’s
over-exposure to TOR whilst, at the same time,
cleaning the balance sheet of TOR to enable it to
transact business on the strength of its own
balance sheet.

“We did not come to this August House for approval
because the issue of bonds was part of the Net
Domestic Financing (NDF) of the 2010 budget which
had already been approved by the House,” Dr.
Duffuor argued.

Source - Daily Guide

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