A financial expert, Johnson Annan has called on citizens and economic analysts to be circumspect in their criticism and commentaries on the Central Bank's decision to support government expenditure in 2022.
This comes after the Bank of Ghana has come under intense criticism for its action which resulted in the printing of new cedi notes to the tune of GH¢44.5 billion.
The BoG in its response contended that the decision was a crisis management tool since the Fiscal Responsibility Act, 2018 which was suspended by the Parliament of Ghana had not been reinstated.
It further added that the economy would have collapsed and faced a halt as access to the International Capital Market was closed while the domestic market was also struggling.
Despite this, Director of the Research Institute of Economic Affairs, Dr. John Kwakye has criticized the BoG saying its explanation contained in a press release cannot justify the scale of lending to the government.
But Johnson Annan, in his view, believes that the BoG’s decision was rather critical and one that was needed in order to avert the destabilization of the Ghanaian economy.
“I must say we are all enjoying the fruits of the central bank’s support. There are no queues for fuel in the country. We are all going about our normal business so you don’t understand what the situation would have been…We would have experienced chaotic situations in the country, with no petroleum imports, pharmaceuticals, etc. I think we should commend the Governor Addison-led administration for ensuring that there is no chaos in the country,” he said in a write-up.
He added “When you are in a crisis, you need to take bold decisions and measures that ensure stability and not wait for approvals. Human lives are at stake. Parliament is in session now and l believe the Honourable Minister of Finance should quickly brief parliament on BoG’s financing of the budget and the new limits.”
Meanwhile, Governor of the Central Bank, Dr Addison addressing participants at a stakeholder conference held in the Eastern Region on February 9, 2023 further explained the rationale behind offering government the needed financial support in 2022.
“We need to remember where we are coming from at the beginning of 2022 when we lost access to the capital market. This is a government that had access to the capital market for at least $3 billion each year, but we started 2022 with the downgrading of the economy and, therefore, the source of financing was not available," he explained.
Dr. Addison added that, “In addition to that, the revenue measures were not working, with the revenue projections performing below targets. All those meant that government finances were in trouble, as expenditures needed to be funded, but there was no money.”
The BoG Governor further emphasized that it had become imperative for the Central Bank to come in and avert a possible destabilization of the economy during the period.
“It is important to recognise that we could have gone into this crisis much earlier than we went; if the BoG hadn’t stepped in, investors in government bonds were not going to be paid the interest,” Dr. Ernest Addison said.
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