According to the BoG, it was left with no option but to support the government because its (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.
"it must be recognized that the ongoing debt operations are part of the corrective measures designed to address the financing problem of the budget. Bank of Ghana financing was part of a crises management tool used in dealing with the difficulties of 2022. In 2018, the Parliament of Ghana suspended the Fiscal Responsibility Act, 2018 (Act,982) in view of the crises precipitated by the COVID-19 pandemic. The Fiscal Responsibility Act has not yet been reinstated by Parliament," it added.
The BoG also said that the Parliament of Ghana was aware that it was financing the budget of the government.
“On a net basis therefore, putting together all claims and netting off all deposit liabilities, these transactions resulted in an increase in Bank of Ghana’s net claims to the Government by GH¢44.5 billion,” it added
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 issues of the central bank and what we keep hearing about what the central bank is doing is extremely troubling, and it must worry anybody living in this country.
“As we speak, per the IMF programme, we are told that now the government has printed GH¢41.9 billion, which is about $3.3 billion. This is money the central bank has printed for the government against all the rules.
“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.
Read the full statement issued by the BoG below:
IB/SARA
Finance Minister Ken Ofori Atta (Left) and Governor of the Bank of Ghana, Dr Ernest Addison