A Financial Analyst, Johnson Ameyaw has said but for the Bank of Ghana (BoG) overdraft to the Ministry of Finance, payments of salaries and other statutory payments would have been difficult.
Mr Ameyaw further explained that because government is paying debts, it needs
funds to ensure payment of salaries and other statutory obligations.
In his view, even Members of Parliament would
not have been able to receive their salaries but the overdraft.
“Without BOG overdraft nobody would have received salaries including
parliament,” he said in an exclusive interview with 3news.com on Friday August
19.
He added “Once government pays for debt
service domestic revenue is exhausted. Overdraft is necessary while the
Government works to get IMF programme in place.”
His comments come after the Minority
Members of Parliament have said they were surprised the contents of the 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.
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.”
By Laud Nartey|3news.com