Finance Ministry Causes GH¢438,638 Penalty On Debts

Mr Seth Terkper,Minister of Finance and Economic Planning (11)The failure of the Budget Division of the Ministry of Finance to promptly generate Debt Service Warrants for the payment of loans last year, resulted in the government paying penalties of GH¢438,638.48 to 42 external creditors.

The penalties could not easily be traced into the public accounts to ascertain the completeness and reliability of the debt service cost.

This came to light during the review of the debt service records which the Debt Management Division (DMD) of the Ministry paid as penalties to the external creditors, by the Audit Service, as contained in the Report of the Auditor-General on the Public Accounts of Ghana Consolidated Fund for the year ending December 31, 2013.

The 42 creditors are KBC Bank, the Deutsche Bank, International Nederlanden Bank, Exim Bank China, Exim Bank USA, and Instituto Creditodo Official-Government of Spain.

The report said the non-provision of accounts codes for default payment in the Chart of Accounts had accounted for the inability of the auditors to identify the quantum of default payments.

“To minimise delays in the servicing of loans and avoid its associated costs, I urge the Ministry of Finance to put in place effective mechanisms to ensure the timely servicing of loans,” the Auditor General, Richard Quartey, recommended in the report.

As a requirement by the Bank of Ghana, loan creditors submitted demand notices before payments were made, to serve as evidence of liability. Accordingly, the ministry has, on the recommendations of the Auditor General, notified all loan creditors to submit their demand notices for debt service claims, at least four weeks to due dates.

That, according to the report, was to forestall the payment of penalties for default payments.

The DMD of the Ministry is responsible for the management of loans which includes the servicing of loans when they fall due as well as paying creditors, penalties on amount due for each day of default.

By Salifu Abdul-Rahaman

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