Editorial
Seeking WB boost for state banks
Meeting conditions challenging
THAT the state-owned banks have been suffering from serious lack of liquidity has been public knowledge for some time. The government is now mulling over seeking World Bank (WB) assistance for financial bailout to meet the large capital shortfall. Though there is discrepancy between the central bank (BB) and WB on how big the shortfall is it is certainly more than US$1billion.
The conditions set by the global lender include, amongst others, the clause that the government relinquish a portion of its ownership in the banks. BB will have to prepare a list of professionals and appoint directors of the state banks drawing upon the list. Furthermore, an expert panel will have to be set up (in consultation with BB) to decide upon precisely what the size of the bailout package will be.
A series of high-profile financial scams involving, in part, the senior management of several state-owned banks has only helped underscore the manner in which graft became institutionalised in these banks. Politicisation of banks' board members and the flouting of established banking rules have been at the root of misgovernance in the sector.
The package is envisaged to be disbursed in quarterly instalments subject to satisfactory fulfilment of conditions attached to each tranche of the loan. We have always advocated for sound financial management of the banking sector. Though recovery will be an uphill task as it comes with meeting tough conditions, the moral here is that we become wiser and prudent from the experience should we opt for it.
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