Government has begun the implementation of several key policy initiatives aimed at promoting long-term economic growth and national development.
One such key policy initiative is the Ghana Treasury Single Account (TSA), which is a set of linked bank accounts through which the government recognises all its receipts and payments. This has required a transfer of 15,172 bank accounts of government institutions to the central bank for ease of management and monitoring.
The TSA would provide government with a consolidated view of its cash resources and to ensure treasury management as required under the cash management reform initiative. When successfully implemented, the TSA would strengthen government’s fiscal management and spending. TSA ensures that the MoF has full control over budget allocations, and strengthens the authority of the budget appropriation.
We expect the affected banks to face some liquidity challenges in the short to medium term. In curbing this, rates on deposits may see an increase as a means of inducing customers. This would make them compete with banks that have surplus liquidity. Lending by the affected banks would reduce due to the significant decline in deposits and possibly compel these banks to downsize staff in order to be more efficient.
The value of these banks, if listed on the exchange, would see a decline as a result of thinner margins due to the increased rates on deposits and the possible reduction in lending. Their risk positions may also be affected as cost of equity increases.
However, the implementation of this programme is a critical step towards curbing corruption in public finance. This is a tool to combat corrupt practices, eliminate indiscipline in public finance and ensure adequate fund flow to critical sectors of the economy to catalyse development.
Download Full Report: https://nimedcapital.com/nimed-research-weekly-25-jan-2019/