ghananlpcommunity/ghana-gov-speeches-sentences huggingface dataset:
As indicated earlier, a ddressing the Governance iss ues at the Fund will also require changes in the size and composition of the Executive Board which brings with it the issue of the organizational structure of the Fund.
The IMF’s structure as constituted in the Articles of Agreement makes it ultimately accountable to the governments of its member countries .
The issue is in the function of the institution.
 At the Apex of its organizational structure is its Board of Governors, which consists of one Governor from each of the IMF’s member countries and an Al ternate Governor.
All Governors meet once each year at the IMF- World Bank Annual Meeting; 24 of the Governors sit on the International Monetary and Finance Committee (IMFC) and meet twice each year.
 The day -to-day work of the IMF is conducted by its 24-member Executive Board, guided by the IMFC and supported by the IMF’s professional staff.
The Executive Board usually meets three times a week, in full sessions, and more often if need be, at the IMF’s headquarters in Washington D.C.
Of the 24 Executive Directors on the Board, 8 are appointed by single countries – the IMF’s largest quota -holders (The United States, Japan, Germany, France, the United Kingdom, China, Russia and Saudi Arabia).
The other 16 Executive Directors are elected for two -year terms by groups of countries known as ‘constituencies’.
14  The Managing Director is head of the IMF staff and chairman of the Executive Board, and is assisted by three Deputy Managing Directors.
The Executive Board of the Fund has extensive and different responsibi lities from that of an ordinary Corporate Board.
The Executive Board takes virtually all the key decisions within the Fund and is more or less an operational body.
In principle, it decides what financial instruments the Fund has at its disposal and even re commends key decisions on quotas, SDR allocations, gold sales, etc.
to the Board of Governors.
Thus the Fund’s Executive Board is not simply an oversight body.
I t is central to the operational decisions taken in the Fund.
So it is directly involved in what it is supposed to oversee, blurring the issues of assignment of responsibility and accountability.
Moreover, the individual Executive Director is a representative of the country or group of countries that appoint him, at the same time he/she is also an official of the Fund.
His is the voice of a constituency and shapes the voice of the institution.
In this dual role, the Executive Director’s effectiveness depends upon his intellectual force and powers of his argument, skill and representation.
Some argu e that he 15 seeks both the best interest of the Fund as a staff of the Fund and that of his constituency and that t his dual role can affect the judgment of an Executive Director and compromise his basic responsibility to protect the resources of the Fund .
This may be so when dealing with matters of specific interest to a member (e.g.
loan decisions) , which raises the issue of responsibility and accountability.
The essence of this all is that the quality of representation matters a great deal, irrespective also of quotas.
This means that small countries could exercise strong voice by the quality of their representation on the bodies of the institution.
This includes representation on the staff of the Fund.
For example, Jacque Polak, Kafka, and Mirhakor all from developing countries have exerted strong influence on the Executive Board.
The composition of the Executive Board, as that of the Board of Governors, changes through what is essentially a political process.
No one can say that it consists of a group of like-minded people who cannot but act as representatives of their governments or the Fund.
There are also various bodies charged with responsibility for managing the institution, which also raise issue s of 16 responsibilities, and accountability and complic ates governance.
This relates to the roles of the various groupings (G3, G7, G10, G24, G70, civil society groups etc), all of which seek to promote certain interests in order to shape and influence decisions at the Fund.
These bodies have evolved over tim e to have an influence on the way the Fund is run.
For about the past 15 years or so, the G7 deputies have been in constant touch with each other, and also with the Fund Management and staff d iscussing issues relating to the IMF .
Now it has become institut ionalized for the deputies to meet prior to the IMF ministerial meetings , and their meetings are growing in importance.
The result is that there is gradual dilution of the influence of the Executive Board.
This is reason for discomfort on the part of member countries that are not represented on these bodies.
For the practice is serving to pull issues for consideration and decisions by agenda-setting bodies like the G7/8 etc outside the established structures of the Fund , which impairs good governance.
A typical example is the formulation of a Fund facility such as the Multilateral Debt Relief Initiative ( MDRI).
T he very detailed proposals adopted by the Finance Ministers of the G8 17 were formulated not by the Executive Board of the Fund or other affected ins titutions but by G8 deputies amid differences of view s about what should be done.
We all know that the MDRI decision benefited many African countries who have undertaken a program of reforms, while this was seen by other countries to have departed from the principle of uniformity of treatment in the use of Fund’s resources.
Other multilateral institutions also have to contend with bargaining processes and maneuvering within diverse stakeholder interests in seeking solutions to global public good problems.
The World Trade Organization (WTO) negotiations are the clearest example.
Take the issue of tariff reductions.
The US, the European Union, and Japan proposed in Hong Kong in 2005 to provide billions in foreign aid to eliminate duties and quotas or exports from the world’s poorest countries.
Officials of developing countries described this , as reported by the Herald Tribune, December 15, 2006 as “looking a gift horse in the mouth, and they are not sure they like what they see because they see the offer (nego tiating positions) littered with obscure exemptions, murky calculations, and special conditions ”.
They thought the offer would rather hurt than help.
It is interesting to hear wh at one Foreign and Trade Minister is quoted to have said “ it would be difficul t for us to 18 be party to an agreement that will make us lose our markets”.
This is Dulloo of Mauritius who spoke as the leader of a 79 -member country coalition of the conference of low - income African Caribbean and Pacific Countries.
Two years earlier, the l ast WTO ministerial meeting had collapsed, over complaints by West African countries over two issues: (i) US cotton subsidies; (ii) Botswana’s objections to streamlining customs regulations.
The WTO practices broad engagement with stakeholders, which provi des scope for each member to show the power of voice when no single member has a veto on the basis of quota which is characteristic of the WTO.
Surely a powerful voice and representation at the negotiating table matters a great deal.
Of course the trade ne gotiations are notoriously tedious.
I must say that the inherent problems in the power sharing structure of the Fund and the rigidities in effecting changes within the system pose challenges of relevance at a time when other private financial institutions within the international financial system are growing in relevance .
If the issues of representation and voice are not addressed effectively, this will reinforce the doubts being expressed in certain quarters about the continued relevance of the institution.
19 32.
As was noted in the Financial Times of February 22, 2006 and I quote “If the International Monetary Fund did not exist, we would not re -invent it.
This is not because it is useless but because today’s world lacks the courage and vision to create powerful multilateral institutions.
The fact alone makes those we have inherited more valuable and even so they must be kept up to date, otherwise they risk suffering a lengthy senescence.
This danger now threatens the IMF”.
The IMF will need to work hard on r eforms that will restore the confidence of emerging markets in particular, in the Fund.
That will almost invariably mean increasing their role in Fund decision making process and also improving the confidence that potential lenders among them will have tha t the provision of such resources will lead to a commensurate increase in their voice in the decisions of the Fund.
The Fund does and can continue to play a powerful role in providing analytical framework and a forum for policy coordination, and advice t o member countries and the international community on global financial issues.
It has adapted to the times.
The entrenched issue of voting rights , voice and representation certainly has to be resolved to strengthen its power and credibility to secure its p lace as a 20 cooperative multilateral institution in the international financial architecture.
KEYNOTE ADDRESS DELIVERED BY MR.
L. VAN LARE DOSOO DEPUTY GOVERNOR OF BANK OF GHANA AT THE “REGIONAL SEMINAR ON RISK-BASED SUPERVISION” CRESTA ROYALE HOTEL, ACCRA 24TH APRIL, 2006 2 Mr.
Chairman, Distinguished Resource Persons, Workshop Participants, Ladies and Gentlemen, I am delighted to be asked to deliver the welcome address and open this very important workshop that is jointly organised by the Bank of Ghana and the Office of the Superintendent of Financial Institution (OSFI), Ottawa, Canada.
Let me take this opportunity to extend to you and especially our foreign guests a warm welcome to Ghana and to this important workshop.
I am informed that apart from the resource persons who come from Canada, we have assembled for this workshop participants from Nigeria, The Gambia, Sierra Leone and Ghana.
I therefore perceive this gathering as constituting a small international community with an opportunity for cultural exchanges in addition to the specialised knowledge and skills to be acquired .
Even though I recognise that this week -long workshop is quite loaded and tight, I will encourage you to find time outside this busy schedule to explore and sample all the wonderful delights Accra has on offer.
Ladies and Gentlemen, there could not have been a better time for this workshop than now given the strategic importance of financial stability to the overall performance of our economies.
Most of our economies (in particular Ghana) at the moment are at the threshold where sustainable macroeconomic stability, of which financial stability is key, has become the imperative condition for the growth and development process.
The international banking scene in general has in recent years witnessed strong trends towards globalization and consolidation of the financial system.
Stability of the financial system has become the central challenge to bank regulators and supervisors throughout the world.
The multi-lateral initiatives leading to evolution of international standards and codes and evaluation of adhe rence thereto represent resolute attempts to address these challenges.
These are major challenges to both developed and developing economies 3 alike and developments over the recent past suggest that one cannot begin to imagine the cost of inaction.
Ladies and Gentlemen, the growing diversities and complexities of banking business, the spate of product innovation with complex risk phenomena, the contagion effects that a crisis can spread given the linkages and interdependence of banks and the growing trend of businesses without borders, calls for a new approach to ensuring the financial health of our economies and that is what Risk-Based Supervision is all about.
The risk based supervision process in my estimation involves continuous monitoring and evaluation of the risk profiles of banks in relation to their business strategies and exposures.
This assessment will be facilitated by the construction of a risk matrix for each institution, and thus creates the room for focused supervision in relation to availa ble resources.
Ladies and Gentlemen, this will in no small way help to optimize the synergies from the different activities, including the regulatory and supervisory functions, and ultimately enhance substantially, the overall efficiency and effectiveness of the supervisory process.
Chairman, the current shift in focus is in line with the introduction of the New Basel Capital Accord (Basel II) to include operational risk.
This puts further emphasis on supervisory review process and market discipline, which borders on transparency and full disclosure of financial information.
These are intended to provide clear bases for effective management of risks and allocation of capital to cover them with the view to making safe and sound institutions.
At the appro priate time, and that is possibly by end 2009, we would adopt Basel II.
In addition to these intended changes, Mr Chairman, another development worth mentioning is the adoption and implementation of International Financial Reporting Standards (IFRS), whic h presents a uniform basis for recognition, classification and measurement of financial assets and liabilities and the related income, and expenditure of financial institutions.
In Ghana, consultations have started between the Bank of Ghana, 4 the Institute of Chartered Accountants and the banks to determined those aspects that affect banks and how to implement them to suit our local conditions.
Ladies and Gentlemen, it is not hard to see that this shift in focus of regulation and supervision will demand a change in management strategies in both the supervisory authorities and the banks.
In particular, the effectiveness of the risk based supervision would invariably depend on banks' preparedness in certain critical areas, such as quality and reliability of data, soundness of systems and technology, appropriateness of risk control mechanism, supporting human resources and organisational back-up.
Chairman, in my estimation, the above will obviously require the banks to re -orient their organisational set up to put in place efficient risk management architecture, risk focused internal audit, strengthening of the management information system, and set up compliance units.
A successful transition to risk based supervision cannot do without the above and obviously make them imperative.
Chairman, for this change to be effective in containing and managing risk, it has to be implemented throughout the whole sub -region in order to avoid contagion due to the current trend of financial integration within our su b-region.
I am happy to note, Ladies and Gentlemen, that efforts are underway to bring the whole sub-region in line.
The West African Monetary Zone (WAMZ) concept includes a proposed central supervisory authority (WAFSI).
This requires member countries to re-engineer their supervisory frameworks to conform to international best practices.
In pursuit of this, an assessment of compliance with the Core Principles of Effective Banking Supervision of member countries was carried out which identified the problem of member countries to include among others: lack of information sharing; risk management; opportunities for money laundering; and lack of remedial measures.
I am glad to note that member countries have since taken necessary steps to adopt relevant aspects of the core principles.
In line with the above, a new Ghana Banking Act was promulgated in 2004, which incorporated the requirements of the core principles.
Consequently, t he Bank of Ghana 5 has begun putting in place measures to align the country’s super vision methodology to a more Risk-Based Supervisory Approach beginning 2007.
It is in view of this that I see this workshop to be extremely important and timely.
It is expected that this workshop will offer you the opportunity to thoroughly evaluate and review the status quo and identify the necessary measures in relation to the way forward.
I believe that the next few days will go a long way to strengthen the capacity of our supervisors and facilitate the application of the Risk -Based Supervisory approac h. The task ahead is challenging but I believe that with a common resolve it is not insurmountable.
Ladies and Gentlemen, let me once again take this opportunity to thank OSFI and the Canadian International Development Association (CIDA) for supporting t his workshop.
I wish you a productive week and encourage you all to draw on the wealth of knowledge of the facilitators as well as the rich experience of your fellow participants.
On this note I declare open the workshop on Risk Based Supervision and wish that you all find this workshop useful and the knowledge gained would deepen our understanding of this important aspect of financial stability.
1 MAIDEN ANNUAL LECTURE OF THE ASSOCIATION OF CORPORATE AFFAIRS MANAGERS OF BANKS (ACAMB) THEME: “HOW BANKS CONTRIBUTE TO ECONOMIC GROWTH AND INTEGRATION IN THE WEST AFRICAN SUB-REGION” ADDRESS BY DR.
PAUL A. ACQUAH, GOVERNOR, BANK OF GHANA Abuja Nigeria, August 12, 2005 His Excellency, Alhaji Atiku Abubakar, Vi ce President of the Federal Republic of Nigeria Ministers of State and Government Officials Members of the Diplomatic Corps Chief Executives of Banks Distinguished Guests and Stakeholders Media Practitioners Ladies and Gentlemen 1.
I deem it a great privilege and honour to be invited to this august occasion as a Guest Speaker.
First of all let me express my sincere appreciation to the organizers as well as the executives and members of the Associ ation of Corporate Affairs Managers of Banks (ACAMB) for the opportunity to give this Annual Lecture.
The theme is “ How banks contribute to economic growth and integration in the West-African sub-region”.
The Association has cho sen this theme for its maiden lecture, I believe for good reasons and at an appropriate time.
It is not because there is doubt about the role of banks in the deve lopment process, or that th e banking indu stry needs to reassure itself of its role and responsibiliti es in growing our econom ies.
I think it is because the banking profession, and certainly, central bank Governors have a critical interest in the unfolding pr ocess of economic and moneta ry integration in the sub- 2 region and in the entire monetary cooper ation arrangements that envisage a single currency and a single African Central Bank for the continent.
In deed, two recent events make this theme very relevant and timely.
In May this year, the Authority of Heads of States of the West African Monetary Zone (WAMZ) reviewed progress made under ou r single currency project and decided to set a new date of December 2009, instead of July 2005 that has just passed, for the launch of the single currency for the regi on.
The markets did not greet this news with any surprise.
In post poning the D-day however, the Authority established an agenda for reform that has significant implications for banks and the financial sectors of the Zone.
I will return to this later.
Th e second event wa s the decision by the Association of Afri can Central Bank Governors to harmonize convergence targets and time frames and speeds of adjustments under the five regional cooperation programs in Africa to achieve monetary union at the continental level.
Again this forward-looking program and vi sion places all of us as bankers, and especially those in policy ma king and management positi ons squarely in the eye of the storm.
So, Ladies and Gentlemen, you will unders tand why in my vi ew this theme is very topical and even strategic and geopolitically correct.
I should add that, I detect a measure of symbolism in exte nding this invitation to me for this inaugural lecture.
The Bank of Ghana ha s been cooperating closely with the Central Bank of Nigeria especially on issues of poli cy convergence and the re forms needed to underpin monetary cooperation under the WAMZ single currency project.
So I have a very good reason to be here, and especially to have Your Excellency Vice President of Nigeria, grace this occasion.
Your Excellency, Mr.
Chairman, Distin guished Ladies and Gentlemen, banking is business and a good bu siness at that bu t one that demands integrity and unquestioned reputation.
The Goldsmiths, who originated bank ing saw a business 3 opportunity as they realized that people who deposited gold with them only withdrew a fraction at a ti m e a s o t h e r s p l a c e d m o r e d e p o s i t s .
T h e y r e a l i z e d t h a t they could make profits by lending out a proportion of the gold deposits counting on the chance that all the go ld would not be called upon at any one time.
But they were not experts in the theory of probability.
In doing so, goldsmiths capitalized on their most important asset which was thei r reputation, and that hinged on their ability to assess the risk of every borrower.
They were acutely aware that if at any given time the public lost confidence in the ability of the gold smiths to safeguard their deposits, a run on them would bring certain calamity.
Chairman, over time the business of banking has grown in complexity but has fundamentally remained the same.
Bank s perform the basic role of financial intermediation by channeling funds from savers to borr owers in the economy.
This intermediation role of ba nks is fundamental to the functioning of any modern economy.
Banks are able to pool funds from a large number of small savers to make loans to other businesses wh ich produce goods and servi ces, create employment, pay taxes to government, fi nance investments and drive economic growth, and yes, in tune with current literature, also drive poverty reduction.
A modern economy cannot function pr operly unless it is possible for people and companies to save or bo rrow money in order to make investments, insure their property as well as possessions.
Banks and other financial institutions take calculated risks, working within an infr astructure of a payments and settlement system, to provide services and a variety of products in organized and orderly financial markets.
It is not hard to see th e close relationship between efficient financial systems and economic growth.
Sometimes we take this intermediation role banks perform for granted but it is diffic ult to imagine the im plications for our economies if banks did not exist.
Chairman, the health of an economy is intertwi ned with the health and soundness of its financial system.
Therefor e, we can understand why the stability of the financial system is a matter of fundamental public interest.
In a sense banking is a public good produced by private market participants motivated by profit but the cost of failure on the part of an institutio n could be incalculable for the society.
The history of banking crisis all over the wo rld indicates that wi thout the assurance of the general public that banks are well-capita lized, liquid and sound, the intergrity of the financial system, like th e Goldsmith, would be at risk.
The system would be unstable, prone to a run on banks, resulting in their cl osure, financial distress for depositors; and the economy vu lnerable to flight of capi tal, possible exchange rate depreciation, and decline in output.
Sound prudential regulation is therefore essential and good for the banking industry.
The Asian crisis of 1997 is a recent reminder not merely about the systemic nature of financial crisis and its contagio n effects, but it is also about a host of problems of inadequate financial regu lation, that has become known as“crony capitalism”.
In an interdependent economic environment in which we live today, the impact of financial crisis in one country is no longer localized but can spread rather quickly to other parts of the world.
As we prepare to allow ca pital to move freely across our borders in the su b-region, in a single mone tary space, we should be mindful that all our countries will be open to financial crisis whether originating locally or abroad.
The challenging ta sk is how do we ensure that the Banking/financial system is stable and seek to avert crisis particularly in a regime of capital account liberalization, which is one key objective of the WAMZ project.