Economist, Prof Godfred Bokpin, has said instead of the current debate about whether the Bank of Ghana is justified in pumping money into the economy in the wake of the coronavirus pandemic, the focus should be on ensuring that the money is not misapplied.
The Finance Professor told GhanaWeb in an exclusive interview that, although the discussions about the soundness of Bank of Ghana’s decision to pump some GH¢10 billion into the economy is well and good, that should not be the key focus.
“Our focus now should not be whether it is right or not. Our focus right now should be whether this stimulus will reach the target and it is efficient, there are no procurement violations and there is greater value for money,” he said.
“In crisis moments, procurement violations are higher,” he added.
Last month, the Bank of Ghana triggered the emergency financing provisions in section 30 of the Bank of Ghana Act 2002 (Act 612), to purchase a government of Ghana COVID-19 relief bond with a face value of GH¢5.5billion at the monetary policy rate, with a 10-year tenure and a moratorium of 2 years.
Governor of the Bank of Ghana, Dr Ernest Addison, said the central bank stands ready to continue with its asset purchase programme up to GH¢10billion, in line with current estimates of the financing gap from the COVID-19 pandemic.
Some GH¢1.2 billion from this fund has been earmarked for the Coronavirus Alleviation Programme (CAP).
Already, GH¢600 million has been disbursed as soft loans to micro, small and medium-scale enterprises (MSMSE), with up to a one-year moratorium and a two-year repayment period. The rate of interest on government’s ¢600 million facility is three per cent.
Additionally, selected participating banks will provide negotiated counterpart funding to the tune of GH¢400 million, making, in all, GH¢1 billion for disbursement under this Business Support Scheme, with the entire scheme set to attract some 180,000 beneficiaries across the country.
This move has been criticised by some economists as a marked shift from the central bank’s stance against budget deficit financing.
However, commenting on the matter, Prof Bokpin said a bi-partisan oversight committee that includes the media and civil society should play the critical role of ensuring that the funds reach their targets.
“Let’s not leave it for the horizontal accountability institutions enshrined in the Constitution. That has failed. Auditor-General has done well, but have you heard him in this COVID-19?” he asked.
He said this is the time the Auditor-General, together with the Procurement Authority, should be issuing guidelines on how procurement can be aligned to the agencies at hand, “so we do not bypass important value-for-money measures in the name of speed and all of that.” He added: “in a crisis moment, people take advantage all in the name of speed, by the time you realise people will end up building their own hospital before they build the ones for the state.”
Prof Godfred Bokpin is an Economist at the University of Ghana, Legon