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The Bank of Ghana has denied lending to the government more than what Parliament approved last year.
According to Central Bank Research Chief Philip Abrodu-Otoo, he actually compiled the ¢ 10 billion agreed between the government, Parliament and the Bank of Ghana (BoG).
He argued that ¢ 10 billion were reached under what can be described as the Asset Purchase Program that allows the central bank, the Ministry of Finance and the Comptroller and Accountant General on the limits of government indebtedness.
Abrodu-Otoo said BoG is ready to provide the necessary documents to support its claim that it did not go beyond what was approved.
“It is already in the Bank of Ghana’s financial statement from last year and can be made available to Parliament,” added the Director of Research.
Background
The minority leader in Parliament, Haruna Idrissu, in the background investigation of Finance Minister Ken Ofori-Atta, and even during his approval in Parliament, raised a red flag on the BoG’s loans to the government.
This was after a summary of the Central Bank’s operations in 2020 captured the Bank’s loans to the government at ¢ 22.5 billion cedis.
The minority leader argued that he will begin investigations into the matter and will also have to call the governor, Dr. Ernest Yedu Addison, to appear before the House to provide some answers on the matter.
BoG gives clarity on government loans in 2020
Mr. Abrodu-Otoo explained that the additional ¢ 10 billion captured in his operations summary was due to some funds that came from the IMF to the government and were channeled through the Bank of Ghana, as well as other financial arrangements.
These should not be seen as new loans to the government, he said.
Breakdown of the numbers
¢ 10 billion for the Asset Purchase Program
¢ 5.6 billion for IMF Covid-19 support
¢ 981 million of IMF Covid-19 support
¢ 925 million to MFI depositors
¢ 5,068 million to Monetization of the Financial Sector
Abradu-Otoo noted that, under the financing agreement, ¢ 5.6 billion was granted to the government, based on the expanded credit line from the IMF, which would supposedly help to cope with the Covid-19 pandemic. The IMF made it available to the government in April 2020.
He noted that, “the resources were loaned to the Bank of Ghana and then it loaned this facility to the government.
The Research Director also added that the ¢ 981 million were actually IMF resources associated with the completion of the seventh and eighth reviews of the IMF’s ECF program that began in 2015.
“The resources were not made available to the government in 2019, but were reflected in the 2021 accounts,” Abradu-Otoo added.
There was another component of ¢ 925 million, and this was basically the payment of interest owed by the Bank of Ghana on the non-negotiable security.
Mr. Abradu-Otoo explained that “Covid-19 conditions meant challenges faced by the government to reimburse, this as ensured by the Bank of Ghana.
The Bank of Ghana also argued that another ¢ 5 billion provided was basically a monetization of financial sector bonds held by the CBD to support its operational efficiency and help pay depositors.
He argued that the above explanation should give some clarity about the ¢ 22.5 billion that was captured in the 2020 budget.
Involve Parliament
The Bank of Ghana added that it was surprised by the development because it had met with Parliament’s Finance Committee to report on the development.
However, he said he was willing to involve the house again in the development.
