Deputy Minister of Finance, Dr John Kumah, has jumped to the defense of the Bank of Ghana (BoG) Governor, Dr Ernest Addison, and his two deputies following the National Democratic Congress (NDC)’s demand for their resignations.
Dr Kumah urged Ghanaians to ignore NDC’s “funny propaganda” against the Central bank’s leadership and the entire government.
In a Facebook post, the Ejisu Member of Parliament (MP) said BoG is in a “solid state” and is nowhere near collapse.
According to him, the BoG’s main source of income is from government transactions, and should government transactions reduce, it will automatically affect the income of the Central bank.
“Ignore this funny NDC Propaganda about the collapse of the Bank of Ghana (BoG). BoG is Solid! The NDC is funny! It’s not true that a recapitalization levy is to be introduced for BoG, the Central Bank hasn’t collapsed.”
“The main source of income to the Bank is from government transactions i.e. fees on all government transfers, the bank’s investments in marketable instruments and also earnings from non-marketable holdings of the Bank.
“Given that government transactions have gone down, naturally, the income of the bank will go down. Also, because of the debt restructuring, earnings on their holdings on markable and non-marketable bonds will go down,” he said.
He added that “Beyond this, the Bank is solid and is capable of performing its core function. Article 183 clause 2 (c) of the 1992 constitution enjoins the Bank of Ghana to promote and encourage economic development in the country, hence there is nothing untoward in the actions of the Central Bank to support the state in its economic recovery efforts.”
The Deputy Minister also intimated that the losses recorded by the central bank are not unusual as most central banks around the world do same to economic anchor objectives.
“It is important to further highlight that a negative balance sheet by a Central Bank is not unusual most Central Banks around the world run negative balances to achieve the overall economic anchor objectives of a Central Bank.”
The NDC and its Minority Caucus at a news conference on Tuesday demanded the resignation of the Central Bank’s Governor and issued 21 days ultimatum to Dr. Ernest Addison and his two deputies for superintending over the unprecedented ¢60.8 billion loss last year.
The Minority Chief Whip also aimed at the Central Bank for the construction of a new head office amidst the current crisis.
However, the BoG has replied saying that GH₵53.1 billion of the total loss of GH₵60 billion occurred as a result of government’s Domestic Debt Exchange Programme (DDEP).
According to a statement from the Bank, BoG stepped in to arrest a major economic and social crisis since the domestic auction was failing.
According to BoG, further downgrade of Ghana’s sovereign debt rating which blocked Ghana’s access to international capital market borrowing triggered a liquidity crisis, spilling over into a balance of payments crisis.
It added that “In 2 months, the Bank of Ghana lost $500 million in reserves and built significant overdraft with the government as a result of the auction failures.
“It became clear that Ghana was on an unsustainable path, and the Government had to approach the IMF for support in July 2022.
“The IMF process included putting into place a credible programme of reform, which included restructuring the total government debt to sustainable levels.
“Until the Staff Level Agreement with the IMF was reached in December 2022, the Bank of Ghana had to continue to provide the necessary support to keep the economy running.”
