An Economist at the University of Ghana ? Legon has warned government not to allow state intuitions to borrow on their balance sheet. According to Dr. Ebo Turkson most state institutions have liquidity problems making it impossible to borrow and will eventually need government to bail them out.
?When they start to borrow those who lend you money begin to look at your ability to pay back and if the institutions find themselves in liquidity problems it means that they are not mobilizing enough revenue which means that they cannot borrow on their balance sheet and they would need government support to borrow.?
Ghana National Petroleum Corporation (GNPC) has come under fire following its move to secure a 700-million dollar loan facility to improve its prospects in the oil and gas sector. Speaking to Citi Business News Senior Lecturer at the Department of Economics at the University of Ghana Dr. Ebo Turkson says even if the IMF makes that conditionality in its negotiations, government should insist on parliamentary approval for such loans this will make such institutions responsible.
?I don?t see how this is feasible because why are these state institutions having liquidity problems, it means that they are not raising enough revenue, so they cannot borrow on their own.?
The Economist recommended that such loans go to parliament for Ghanaians to know that a loan is being contracted by the government to help such state institutions and government should put in monitoring mechanisms to ensure that these monies are put into judicious use or applied to help expand and increase the revenue capacity of such companies and also ensure that these monies are paid back by the companies so it doesn?t become government debt.
?We should see to it that the institutions do the right thing so we are able to repay back the loan so it does not pile up our national debt which will mean future generations will have to pay for inefficiencies are caused by certain managers of companies?
Source: NORVAN ACQUAH – HAYFORD
