- Professor John Gatsi has advocated for a 5% cap on interest on treasury bills, loans and other securities
-The Dean of the School of Business at the University of Cape Coast (UCC) explained that such packages for the government should be approved by Parliament
- Professor Gatsi added that any form of government borrowing must be short-term, and not long-term
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Professor John Gatsi, the Dean of the School of Business at the University of Cape Coast (UCC), has cautioned the government about the interest cap on treasury bills, loans and other securities.
According to him, this is important, in the wake of the decision of the Bank of Ghana to support the government in its combat against COVID-19.
He added that the interest of such borrowing should not exceed 5% and that should be insisted on regardless of the economic conditions.
READ ALSO: Government confirms receipt of GHC5.5 billion from Bank of Ghana
Per a report by Ghana Web, he explained that “according to Act 918 which amended Act 612 by introducing subsection 7, total loans, advances, treasury bills and other securities must not be more than 5 percent of previous year’s revenue. Any borrowing more than this requirement is illegal, and the explanation that we are not in normal times does not make it legal.”
Professor Gatsi added that in the year 2019, the total revenue was about GH¢52billion and 5% of this is GH¢2.6 billion.
In that respect, he went on, the Central Bank has already provided GHC4.5 billion to the government, which is a violation.
The academician added that any form of government borrowing must be short-term, and not long-term.
This, he insisted, should have prior approval from the House of Parliament.
YEN.com.gh earlier reported that The Bank of Ghana (BoG) has reportedly agreed to support the government with GHC10 billion to help close Ghana’s deficit gap.
The Central Bank halted support for the government after Ghana entered into an Extended Credit Facility (ECF) programme with the International Monetary Fund (IMF).
It, however, resumed after the outbreak of the coronavirus led to a widening of the budget deficit from 4.7% to 7.8% of Gross Domestic Product (GDP).
READ ALSO: COVID-19: Government to lose over GHC15 billion in revenue in 2020
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