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Ernest Addison: BoG financed government 2 out of 6 years to address crisis

Ken Ofori-Atta, Finance Minister (left) and Dr Ernest Addison, Governor of Bank of Ghana (right)

The Bank of Ghana (BoG) has debunked claims that it has been providing financing for the government every year. According to the Central bank, in the past six year, it provided financing for the government for only two years.

BoG Governor Dr Ernest Addison in a statement said there has been zero financing in 2017, 2018, 2019 and 2021. He stated that BoG only financed government in the pandemic year of 2020 and the crisis year of 2022.

The Bank of Ghana Act (612), as amended, limits financing of Government to five percent of previous year’s tax revenue which eh said BoG has adhered to since he assumed office in April 2017.

Dr Addison explained that 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.

He noted that 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 BoG purchased GH₵10 billion worth of COVID-19 bonds to support the economy through the pandemic.

This, he said was done within the applicable laws governing BoG When section 30 (6) of the Bank of Ghana Act (612), as amended, was triggered which 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 programme and status of the Domestic Debt Exchange Programme (DDEP).

Reporting by Wilberforce Asare in Accra

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