Finance Minister Ken Ofori-Atta has expressed government’s readiness to help local banks that will be affected by the implementation of the treasury single account (TSA) initiative that seeks to move all government funds from the commercial banks to the central bank.

The Finance Minister, who was peaking at the launch of the TSA initiative last Thursday, said the move will rather make the banks competitive as they will be compelled to go onto the market to look for depositors’ funds.

The initiative which forms part of the Public Finance Management Act (Act 921) will see government move about GH¢5 billion of funds lodged in various accounts held by Metropolitan, Municipal, and District Agencies among other government institutions to the central bank to monitor government’s cash flow in real-time.

According to some of the banks holding these funds, government’s decision to move the funds will affect their liquidity position, arguing that some of the funds remained locked in unpaid facilities advanced to contractors that executed government jobs for which they are still owed.

But Mr. Ofori-Atta told the press that while government is committed to ensuring the TSA is implemented in accordance to PFMA (Act 921), it is mindful of the overall impact it may have on the banking industry and as such will be implemented in a way that safeguards the industry.

“The clarity for us is a strong bias towards ensuring that the indigenous banking representation remains. And we will find solutions to that [challenges that emerge from the TSA implementation] and make sure that the strong ones remain to drive the economy forward,” he added.

The Controller and Accountant-General, Eugene Ofosuhene, also speaking at the event reiterated that pre-feasibility studies and impact assessment that have been conducted prove that the Commercial Banks will not be significantly impacted both on the aggregate level and on individual basis.

The full implementation of the Treasury Single Account, he said, is expected to contribute to the improvement in treasury operations and consequently facilitate better service delivery.


TSA and banks’ troubles


According to the PFMA which establishes the Treasury Single Account, the initiative is to, among other things, serve as an account into which all government cash including monies received by covered entities shall be deposited and from which all expenditure of government and entities shall be made.

But the banks raised objections saying that the government entities that have funds lodged with them have borrowed against these funds and as such transferring these balances and any action requiring the transfer of these accounts without settling the indebtedness will severely jeopardise the banks.

“The transfer of the accounts without the settlement by the government of the overdue credit to government institutions and related government projects will create significant balance sheet mismatches and negatively impact on the financial sector in particular and the economy as a whole.

Given government’s indebtedness to commercial banks, among other concerns, the banks are placed in a position which constrains us to meet the request to transfer Government of Ghana account balances to the central bank,” the banks said prior to the launching of the initiative last week.