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.