Financial sector clean-up: Printing money to pay depositors a bad idea

Economist, Prof. Peter Quartey, has shot down the proposal for government to consider the printing of more money to settle claims of depositors of collapsed financial institutions.

He believes printing more money will have serious implications on the country’s budget deficit which is the difference between government’s revenue and expenditure.

His comments follows Renowned Economist, Kwame Pianim’s suggestion that the government considers approving the printing of money by the Bank of Ghana to settle claims of depositors who have been affected by the financial sector clean up.

Although Economist Professor Peter Quartey agrees that payment ought to happen, he insists government must look for other alternatives to do so other than printing more money.

Already, government has spent several millions of Ghana cedis for the clean-up which included paying some depositors.

“How we finance that is very critical. I don’t think printing more money is an option. Printing money will be inflationary and that can even lead to higher budget deficit beyond the 5 percent threshold that we have. So yes we can find money to pay but not through printing money, that is not productive, that will rather be inflationary” he said.

The Bank of Ghana has between 2017 and 2019, revoked the licenses of nine indigenous banks for violating various regulations guiding their operations.

The licenses of over four hundred other financial institutions comprising Micro-finance, Savings and Loans as well as Fund Management companies, have also been revoked.

This has affected about 4.6 million depositors whose monies could have been lost completely had the regulators not taken the action.

Source: Citibusinessnews