The Minority Spokesperson on Finance has said government’s decision to cap statutory payments would have an adverse effect on the country’s banking sector.
The government in its 2017 budget statement and economic policy indicated that it will cap all statutory funds at 25% to finance the one-district-one-factory and free SHS policies.
This means that 7.5% of all total revenue of the country that goes to the District Assemblies Common Fund (DACF) will be slashed down to 5% if this is implemented.
But Cassiel Ato Forson believes 25% cap on statutory funds such as the District Assembly Common Fund would affect the release of funds to contractors handling various projects.
This he said would result in an increase in non-performing loans in the banking sector.
Speaking to Citi News, the Ajumako Enyan Essiam lawmaker said government should have consulted widely before reaching its decision.
“…If care is not taken we will see a new scenario where the banks are seeing a lot of government contractors not getting paid and therefore they are not servicing their debt. There is a likelihood that we are going to see a lot of non performing loans in the banking sector. ..that is why I said it was prudent for them to have engaged them and agreed on the moratorium…so they can have the revenue and then use it to service those things because the impact on the economy might be very dangerous.. “
Before the budget presentation, the Deputy Minority Leader in Parliament, James Klutse Avedzi, had kicked against the possible review of the law to reduce the allocation of statutory funds.
Mr. Avedzi had argued that, a likely downward review of allocations as they have gathered, would negatively impact development.
Mr. Avedzi, as an example, explained that “if you want to reduce the Assembly common fund from 7.5 percent to 5 percent, what it means is that about one-third of what is going to the assembly will no longer go there. So if the Assembly had 1.5 million, this assembly will only receive 1 million.”
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(Via: CitiFM Online Ghana)