The Minority in Parliament has said it has noted with utter surprise the contents of the the Bank of Ghana (BoG) Monetary Policy Committee (MPC) press statement dated August 17, 2022 that mentioned that the central bank was working with the Ministry of Finance to agree on a cap on the overdraft.
Paragraph 6 of the MPC statements stated, “In the absence of access to the international capital market and given the constrained domestic financing, central bank overdraft has helped to close the financing gap as reflected in the mid-year budget review. The Bank of Ghana is working with the Ministry of Finance to agree on a cap on the overdraft”.
But the Minority said the BoG’s overdraft is the same as monetary printing in the technical sense, which BoG denied earlier as per its statement dated July 26, 2022.
The opposition lawmakers earlier alleged that the central bank has, on the instruction of the government, printed ¢22billion money without the knowledge of Parliament.
Member of Parliament for Ajumako-Enyan-Esiam Constituency, Cassiel Ato Forson made the allegation after the Finance Minister Ken Ofori-Atta presented the 2022 mid-year budget review on Monday July 25.
He said “Between January and June 2022, the Minister responsible for Finance and the government went to the Central Bank, and they encouraged the BoG to print money worth GH¢22 billion. They have printed GH¢22 billion fresh money without the knowledge of Parliament and without informing all of us.”
But the BoG denied the claims, saying that “In Appendix 2A of the Mid-Year Fiscal Policy Review document, under Financing, out of the total financing of GHC28.12 billion, an amount of GHC22.04 billion was captured under BOG. This is the amount being referred to by the Ranking Member as BOG’s printing of currency to support the budget.
“The Bank of Ghana deems it necessary to provide clarity on the issue and to set the records straight. The amount of GHC 22.04 billion represents net claims on Government, and not new currency printed to support the Government’s budget. The net claims of GHC 22.04 billion has the following four components: Government of Ghana Stocks and bonds sold by commercial banks to Bank of Ghana under repurchase agreements, by which banks routinely manage their liquidity positions; IMF SDR allocation disbursed to Government through Bank of Ghana; Draw-down of Government’s own deposits held with Bank of Ghana; Negative balance on Government’s account with Bank of Ghana at a point in time, and selfliquidated as new Government deposits are credited to the account.”
The Minority in their reaction to the MPC emergency meeting further said “Second, given that BoG is now “working with the Ministry of Finance to agree on a cap on the overdraft”, BoG is acting in utter disregard for provisions in the Bank of Ghana Act, 2002 (Act 612) and the Bank of Ghana (Amendment) Act, 2016 (Act 918).
“There is nowhere in Act 612 or Act 918 where BoG is mandated to arbitrarily grant central bank overdraft when there is lack of access to the international capital markets coupled with constrained domestic financing, Parliament has oversight and must mandate such an exceptional financing of government by the central bank before execution.
“In any case, Section 6 of the Bank of Ghana Act, 2002 (Act 612) and Section 7 of the Bank of Ghana (Amendment) Act, 2016 (Act 918) clearly signal the prior involvement of Parliament in such extreme circumstances.”