Governor of the Bank of Ghana, Dr. Abdul Nashir Issahaku, has rejected calls for the central bank to pay interests on monies deposited in government’s accounts. According to him, the law that sets up the central bank does not allow it to pay interests on government deposits. Dr. Abdul Nashir Issahaku rather argues that the role of the central bank is to use the deposits for leverage liquidity management purposes. “The law as it is now does not allow the Bank of Ghana to pay interest on government deposits. We are therefore applying the law.” Dr. Issahaku further explains to Citi Business News the central bank is not in the business of making money. “It is also important to note that whether the government deposits are kept with the central bank or a commercial bank appointed by the BoG to do so, our role there is to use that or leverage that for liquidity management purposes. That also has to be taken into consideration in our conversations with the fiscal authorities to determine the way forward.” The Governor’s comments come on the back of increased pressure for the BoG to consider paying interest on deposits in government’s accounts with the central bank. Meanwhile Dr. Abdul Nashir Issahaku intimates of ongoing discussions on the current BoG Act to have the bank to pay interest on government’s deposits. “The law is being revised and the conversation is ongoing but the central bank is not in the business of making money it is not like a regular bank where we charge interest, that is not the job of the central bank.”
$250m ‘diverted’ Eurobond cash saga
Some had argued that the need to earn interests on deposits may have prompted claims by the running mate of the opposition NPP, Dr. Mahamudu Bawumia that government has diverted state funds for electoral gains. Dr. Mahamudu Bawumia asserted that government had directed that about 250 million dollars of the total proceeds from the $ 1 billion Eurobond it issued in 2015 be transferred into a private account. Government through the Transport Minister, Fiifi Kwetey dismissed the allegations. According to the Ketu South MP, as a former Deputy Governor at the Bank of Ghana, Dr. Bawumia should understand that it was prudent for the Finance Minister, Seth Tekper, to invest in profitable ventures for and on behalf of the State. Mr. Kwetey further observed that Dr. Bawumia would have understood why the money meant for the infrastructure fund was invested, had he taken time to understand Ghana’s infrastructure fund and the laws that regulated it. “If he [Dr. Bawumia] had taken his time to understand the working of the Ghana infrastructure fund and the laws which regulated it, he clearly would have known that not one pesewa of any money that is meant for the infrastructure fund is meant to remain in some kind of idle account at the central bank earning nothing,” he explained. Mr. Kwettey further remarked that the very aim of the infrastructure fund was to help the country leverage critical funding for economic infrastructure.
Source: citibusinessnews
