The Bank of Ghana (BoG) has stated that it undertook some critical interventions to prevent the economic collapse of Ghana.
Buttressing this claim, the Central Bank said it supported the economy when COVID-19 struck.
Section 30 (6) of the Bank of Ghana Act (612), as amended, was triggered, and the Central Bank purchased 10 billion worth of COVID-19 bonds to support the economy during the pandemic.
This was done within the applicable laws governing the Bank of Ghana, according to a statement issued by BoG on Monday.
The statement was necessitated by recent developments following the publication of the 2022 Annual Report and Financial Statements of the Bank of Ghana on July 28, 2023.
“When section 30 (6) of the Bank of Ghana Act (612), as amended, is triggered, it, allows the Governor, the Minister for Finance and the Controller and Accountant General to agree on a new limit of central bank financing.
“The law further says that the Minister of Finance will then have to inform Parliament, and the Minister has since informed Parliament as part of his briefing to update Parliament on the International Monetary Fund programme and status of the Domestic Debt Exchange,” Governor of the Bank of Ghana, Dr. Ernest Addison said.
He also dismissed the assertion that Ghana’s current financial condition will impact negatively on the operations of the bank.
According to him, the International Monetary Fund (IMF) Technical Assistance mission validated this conclusion.
“In their opinion, the Bank of Ghana was policy solvent and would remain so, as it had enough income to cover monetary policy operational costs,” the Governor disclosed.
According to him, the IMF alluded that the Bank of Ghana had sufficient capital amounting to about 15% of its total liabilities.
“Its recommendation was for the Bank to retain all profits and a reassessment should be made in the year 2027. The Bank will also manage to reduce its operational costs during this period,” the Governor pointed out.
“In all these, the Bank of Ghana has acted within the applicable laws. It is not true that the Bank of Ghana has been providing financing for the government every year,” the Governor added.
He stated that there has been zero financing in 2017, 2018, 2019 and 2021, adding, the Bank of Ghana has only had to support in the pandemic year of 2020 and the crisis year of 2022.
“The Bank of Ghana Act (612), as amended, limits financing of government to 5.0% of previous year’s tax revenue. This provision in the law has been adhered to since I took office in April 2017. Between 2017 and 2019, in addition to the requirements of the Bank of Ghana Act (612), as amended, the Bank signed a Memorandum of Understanding (MoU) with the Ministry of Finance to even impose a tighter restriction of zero central bank financing, and this was observed strictly, even though MOUs are not legally binding,” he stressed.
Between 2012 and 2015, the Bank of Ghana provided overdrafts to finance the government and COCOBOD every year. And there was neither a pandemic nor a global economic crisis.
A Daily Guide Report