BoG’s current condition won’t negatively impact on its operation – Dr. Addison  

The Governor of the Bank of Ghana (BoG), Dr. Ernest Addison has stated that the current financial condition of the bank will not negatively impact on its operation.

According to him, International Monetary Fund (IMF) Technical Assistance mission validated this conclusion, before the necessary decisions were taken.

“It is worth noting that Central Banks are not commercial banks. Bank of Ghana’s current financial condition will not impact negatively on the operations of the Bank. The IMF Technical Assistance mission validated this conclusion, before the necessary decisions were taken. In their opinion, the Bank of Ghana was policy solvent and would remain so, as it had enough income to cover monetary policy operational costs.

“The Bank of Ghana had sufficient capital amounting to about 15 per cent of its total liabilities. Its recommendation was for the Bank to retain all profits and a reassessment should be made in the year 2027. The Bank will also manage to reduce its operational costs during this period,” Dr. Addison stated in response to the accusation from the National Democratic Congress (NDC) of the BoG’s indebtedness.

He continued: “Ladies and Gentlemen, in all these, the Bank of Ghana has acted within the applicable laws. It is not true that Bank of Ghana has been providing financing for the Government every year. There has been zero financing in 2017, 2018, 2019 and 2021. The Bank of Ghana has only had to support in the pandemic year of 2020 and the crisis year of 2022.”

Dr. Addison also stated that the Bank of Ghana Act (612), as amended, limits financing of Government to 5 percent of previous year’s tax revenue.

According to him, this provision in the law has been adhered to since I took office in April 2017.

“Between 2017 and 2019, in addition to the requirements of the Bank of Ghana Act (612), as amended, the Bank signed a Memorandum of Understanding (MOU) with the Ministry of Finance to even impose a tighter restriction of zero central bank financing, and this was observed strictly, even though MOUs are not legally binding. Between 2012 and 2015, the Bank of Ghana provided overdraft to finance government and Cocobod every year. And there was neither a pandemic nor a global economic crisis.

“When Ghana was hit with the Covid-19 in 2020, Section 30(6) of the Bank of Ghana Act (612), as amended, was triggered, and as indicated earlier, the Bank purchased GHC10 billion worth of Covid19 bonds to support the economy through the pandemic. This was done within the applicable laws governing the Bank of Ghana. When section 30 (6) of the Bank of Ghana Act (612), as amended, is triggered, it, allows the Governor, the Minister for Finance and the Controller and Accountant General to agree on a new limit of central bank financing. The law further says that the Minister of Finance will then have to inform parliament and the Minister has since informed parliament as part of his briefing to update Parliament on the IMF program and status of the Domestic Debt Exchange.

“Let me also seize this opportunity to talk about an issue that has come up lately in the media and one which borders on our new Head Office building. While discussions on a national security issue like the Central Bank building is a sensitive one, I will provide you with a brief history of how this has evolved over the years.”

Source: Today.com.gh