Government owes GN Bank GHS300 million in unpaid interim payment certificates. This is according to Dr. Papa Kwesi Ndoum, the president of Groupe Ndoum. He states this debt played a crucial role in the bank's financial downfall.
These unpaid certificates relate to government contracts that were financed by GN Bank. Dr. Ndoum explained that the New Patriotic Party (NPP) administration initiated a review of contracts in 2017. While this review found no fraud, many of these contracts were later terminated. This left contractors and the bank with substantial outstanding payments. The bank had previously financed about GHS10 billion worth of government contracts over seven years.
This situation fits into a broader economic challenge in Ghana. Unpaid government arrears to contractors are a recurring issue. Such delays can strain the finances of banks that provide funding for these projects. The banking sector in Ghana has faced significant consolidation and restructuring in recent years. GN Bank itself was downgraded from a universal bank to a savings and loans company. Its licence was later revoked by the Bank of Ghana. This event was part of broader efforts to clean up the financial sector.
Dr. Ndoum made these claims on JoyNews’ Newsfile program. He asserted that if the GHS300 million in unpaid interim payment certificates had been settled, the bank's financial position would have been much stronger. He believes this would have prevented the need for the bank's reclassification. Groupe Ndoum recently secured a legal victory regarding the revocation of GN Savings and Loans' licence, adding context to the ongoing dispute.
The implications of these allegations are significant for public finance management. It raises questions about the government's payment obligations to contractors and financiers. This situation could impact investor confidence. It also highlights the potential for government contract reviews to have unintended financial consequences. Stakeholders will be watching for any official response or further details on the status of these outstanding payments. The amount of GHS300 million represents a substantial sum for the Ghanaian economy.