![Lending to govt without parliamentary approval impedes capital market growth – Kofi Amable](http://ghheadlines.com/images/default.png)
Finance Lawyer Jonathan Sitsofe Kofi Amable has expressed concern over the absence of parliamentary approval for government borrowing.
He asserts that lending to the government through the issuance of treasury bills, bonds, and domestic debt securities without parliamentary approval hinders the growth of the capital market.
Lawyer Amable has already directed his lawyers to approach the Supreme Court to enforce Article 181, which requires all forms of government borrowing to receive parliamentary approval.
Article 181 (5) of the 1992 Constitution of Ghana stipulates that all international business or economic transactions in which the Government is a party must be laid before Parliament for approval before they can come into effect.
In an interview on Citi TV’s The Point of View, the Finance Lawyer underscored the need to repeal these provisions that obstruct the development of the capital market.
“What we’re doing is we’re seeking for the court to enforce Article 181 to require that lending to the government through the issuance of domestic debt securities. Be it treasury bills or bonds must be done subject to parliamentary approval of the terms and conditions of the transactions. Lending by the BoG to the government under the BoG Act is also done that way.
“The relevance of provisions of these Acts which fly in the face of the constitution of parliament should be struck down. These are the things we are seeking, and they are quite important because in my practice as a finance lawyer, we have realised that these things at the end of the day, especially when it comes to the capital market prevent it from being deepened and developed,” he told host Bernard Avle.
Lawyer Amable criticised the government’s crowding out, which stifles the growth of the capital market.
The Finance Lawyer noted that the Domestic Debt Exchange Programme has put pressure on treasury bills, leading to lower coupons on bonds.
He suggested that resolving the high rate on treasury bills would enable the private sector to produce more.
“No matter how attractive an investment is, and we’re talking about low productivity and economic growth, and you need the private sector to grow. The private sector needs access to capital to be able to do that. And if banking rates are high in the traditional banking sector, the various corporate institutions also have recourse to the capital market.
“One thing that inhibits the growth of our capital market is this issue of the government crowding out because if you have a corporate institution that is seeking funds and comes to the market, everybody is looking at the risk involved.
“And what are the returns I can get if I’m lending on government bonds, treasury bills? Back then the problem had to do with the bond, now with the DDEP, coupons on the bonds are lowered and the focus is on the treasury bill which is seen at a high rate. If these things are resolved then the rate can be controlled and it will give the private sector more capital, so that they can do more, produce, more and boost the economic development of the country. That for me is the focus.”
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The post Lending to govt without parliamentary approval impedes capital market growth – Kofi Amable appeared first on Citinewsroom - Comprehensive News in Ghana.
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