Maxwell Opoku-Afari
MAXWELL Opoku-Afari, First Deputy Governor of the Bank of Ghana (BoG), says the bank has limited its financing of government budget to zero per cent since the five per cent cap was placed on it.
According to him, from December 2016 when the amended Act (Act 198) came into effect, the BoG’s financing to the budget has been zero per cent until recently when management triggered section 30 of the Act and went into the asset purchase programme.
Responding to questions from members of the Public Accounts Committee (PAC) of Parliament during a public sitting on Wednesday, Dr. Opoku-Afari indicated that the stock at the beginning of the setting of the cap had been ring-fenced and “we have not added to that stock.”
The MPs were examining the report of the Auditor General of Ghana on public boards, corporations and other statutory institutions for 2017, which was referred to the committee for consideration. The AG had indicted the central bank for violating section 15 of the Act.
But responding to the accusation, Dr. Opoku-Afari said, “I want to put on record that since the time that the Act (Act 198) came into effect, the central bank has entered into an MoU with the Ministry of Finance, and we have actually limited this (referring to the five per cent cap) to zero per cent.”
He explained that the position taken by the Auditor General was “more of interpretation of that section; because to set the cap and say that financing should not exceed five per cent, I think it could have been a bit clearer.”
“Because if you take the stock position into consideration then right from the onset there is a violation, because we were way above that five per cent,” he explicated further
“What we do normally, looking at other jurisdiction outside Ghana, based on my experience is that you ring-fence the stock and then have a programme to bring it down overtime to zero, while you focus on the flow going forward and make sure that flow becomes consistent with what is in the Act (Act 198).”
The Deputy Governor said the BoG had focused on the flow and was not even doing five per cent consistently than zero “until this year when we triggered section 30 for the asset purchase programme.”
The BoG Act was amended in 2016 and as part of the amendment a cap was placed on central bank financing not exceeding five per cent of the previous year’s revenue. At the time of amending the Act and placing that cap, the stock of the central bank was far exceeding that five per cent.
“I want to put on record that since the time that the Act (Act 198) came into effect, the central bank has entered into an MoU with the Ministry of Finance and we have actually limited this to zero per cent.”
BY Ernest Kofi Adu, Parliament House