Majority vows to push through ¢2b GAT sovereign guarantee

The Majority in Parliament have served notice that they will use their numbers to push through government’s request for a ¢2 billion sovereign guarantee for the Ghana Amalgamated Trust (GAT).

The request is before the House’s Financial Committee for approval and Parliament is supposed to consider it on Wednesday.

GAT’s formation and debt sale come in the closing stages of the banking sector cleanup during which lenders had to raise their capital holdings, a process which cut the number of banks by almost a third to 23.

Government created it as a special-purpose vehicle which will use a debt-sales-proceeds to purchase shares in five lenders and help them meet a minimum capital threshold of ¢400 million.

Government is to start a debt sale this month to prop up lenders as authorities seek ¢2 billion ($403 million) in finance for undercapitalised banks.

The beneficiaries are National Investment Bank Ltd., Agricultural Development Bank Ltd. UMB Bank Ltd., Prudential Bank Ltd. and the merged entity of BSIC Ghana and Omni Bank Ltd.

But the Minority has served notice they will resist that request.

According to them, government’s decision to establish the GAT to help some local banks meet minimum capital is illegal.

Deputy Minority Leader, James Klutse Avedzi, says unless government properly establishes the Trust by seeking parliamentary approval, they will not back the request for a sovereign guarantee.

“We have few issues that need to be clarified and the committee which is still working on that is demanding number of documentations. First of all, GAT is alien to Parliament and we don’t know what it is…is it a company set up by who?

“Why do you introduce a company that is alien to Parliament and bring it for us to work and give it a sovereign guarantee to go and borrow money,” he quizzed.

According to him, Article 192 of the Constitution requires that public entities can only be set up through an Act of Parliament.

Mr Avedzi said the Minority won’t be concerned if GAT were a private entity but for the fact that it is brought to Parliament for a sovereign guarantee, the right thing must be done.

He disagreed completely with rectifying the bill for the House to move on to grant the request.

“Withdraw this sovereign guarantee request and come back to Parliament with a bill to establish GAT.  We will pass it into an Act to establish the company…but don’t pass by the backdoor,” he said.

Mr Avedzi said because the Majority have the numbers, they are bullying their way through when it comes to voting on issues.

“They forget that there is tomorrow and they will not be in power forever…another party will come into power to question sudden things they are doing now. We can go to court and ask for the interpretation of the law,” he said.

Source: Myjoyonline