Dr. Tiah Kabiru Mahama, a technical advisor at the Office of the Vice President, has said that the printing of over GH¢41 billion Bank of Ghana (BoG) to finance the government's budget in 2022 is not necessarily wrong.
He said that Ghanaians cannot conclude that the BoG has done something illegal just because of reports that it has printed over GH¢41 billion which might be more than the 5 percent of total revenue it is allowed to use to finance the government’s budget.
Speaking in a Good Morning Ghana interview monitored by GhanaWeb, Dr Kabiru Mahama added that the government and BoG have gone to Parliament to set aside some rules of the finance sector including the Fiscal Responsibly Act when they had to and they will not engage in irregularities now.
“… there is a presumption of regularity in the affairs of the central bank unless we prove that something has been done irregularly.
“If that government has contemplated the law and has gone to Parliament without wanting to set aside the law and do things at their discretion and wimps, that government will equally think about the law when they are dealing with the central bank borrowing.
“We are assuming that something has been done irregularly… until it is proven based on the central bank’s own books and the outstanding loan the government is owing the central bank, we cannot be saying that this allegation that it (BoG) has done something wrong is true,” he said.
“I know Dr. Addison and his able deputies; they will never do anything that is outside the law,” Vice President Dr. Mahamudu Bawumia’s advisor added.
Meanwhile, the Bank of Ghana has justified its decision to print over GH¢40 billion for the government to finance the 2022 budget.
According to the BoG, it was left with no option but to support the government because it (the government's) access to International Capital Market was closed and the domestic market was also struggling.
In a statement issued on Thursday, February 9, 2023, the central bank posited that its action was not wrong since the Fiscal Responsibility Act, 2018 which was suspended by the Parliament of Ghana had not been reinstated.
“… it will be important to recall the circumstances under which Government of Ghana decided to seek IMF support. Ghana had lost access to the International Capital Market, domestic revenue was significantly underperforming and not realized, pushing the state of government finances into near external and domestic default.
“With the above, the policy choices were not that of business as usual but rather a more challenged conduct of macroeconomic policy in the context of crisis. The government needed to finance critical expenditures for which Bank of Ghana needed to provide the necessary financing to avert a disorderly default of both servicing for domestic and external debt including financing critical imports to keep the economy on the stable path,” parts of the statement read.
The statement by the BoG comes after it was heavily criticized by some Ghanaians after a Bloomberg report indicated that it printed GH¢41.9 billion for the government in 2022.
Broadcaster Dr. Randy Abbey, who was reacting to the Bloomberg report, said that the BoG, which is supposed to be regulating the country’s financial sector, appears to be breaking all the rules in the sector.
“The level of seeming recklessness and lawlessness, and irresponsibility when it comes to the operation of the central bank and the lack of transparency is getting worrying,” he said.
Watch the interview below:
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