The Bank of Ghana (BoG) press release from July 26, 2022, which intended to address my statement criticizing the BoG for indulging in illegal money printing, has been noted with dismay by the NDC Caucus in Parliament.
The NDC Caucus in Parliament must be clear from the start that it stands by its original claims in order to dispel any potential confusion.
It is unfortunate to see that the BoG’s statement consists solely of sophistry and flimsy ex post facto justification.
Instructively, the information found at page 97 under Appendix 2A completely and unmistakably refutes the BoG’s assertions.
Reference is made to the BoG assertion that GHS6.2 billion out of the GH22 billion reflects on-lending of IMF SDR resources, as stated in their press release from July 26, 2022. In stark contrast, the Mid Year Review of the Minister of Finance states on the relevant page that there was no such on-lending. The actual amount of on-lending was zero, as opposed to the anticipated GHS4.53 billion.
The BoG also made the false claim that portion of the infamous GHS22 billion came from a withdrawal from the government’s own deposit for the GETFund, DACF, and NHIF, totaling GHS2.8 billion. This cannot be true given that Appendix 2C on page 99 of the Finance Minister’s Mid Year Review states that the Ministry of Finance had already issued all of those statutory monies for GETFund, DACF, and NHIF to use.
How can the BoG assert that it is lending the government money that has already been spent? The BoG needs to stop covering up with voodoo and give Ghanaians some credit for their intelligence.
We anticipate the BoG to act honorably by acknowledging their wrongdoings and claiming their independence as provided by Ghanaian law.
Let’s be clear: The 33.8 percent increase in the BoG’s balance sheet as of June 2022 is the result of high-powered money being illegally printed and pushed into the economy. This should cause great concern for all well-intentioned Ghanaians.
The BoG may be minded to respond to the following critical questions:
- If a bank is holding Government stocks or bonds and wishes to discount them, the Ghana Fixed Income Market is where such banks can engage in secondary trading for liquidity purposes. Why has it become BoG’s primary duty?
- Why has BoG over the last many months curtailed lending to banks but is busy lending to Government at the same time?
- How is BoG implementing monetary policy currently, given the truncation in its monetary operations?
- What are the measures being implemented to fight inflation and anchor inflation expectations currently, particularly when the policy rate has been muted and also, given the fact that BoG’s gold purchase programme is itself inflationary?
- Why is BoG ignoring the adverse impact of fiscal dominance on the effectiveness of its monetary policy?
- Is BoG taking cognizance of the adverse impact of monetary financing and illegal printing of money in the midst of a major economic crisis where inflation approaches an unprecedented 30% and is expected to rise further?
In accordance with Section 3(1) of the Bank of Ghana (Amendment) Act, 2016, the NDC Parliamentary Caucus would like to remind the BoG that (Act 918). BoG has the authority to reject directives from the government or any other authority. Therefore, despite Section 30(7) of the Bank of Ghana (Amendment) Act, 2016 (Act 918), the Bank of Ghana has complete authority to restrict BoG financing of government in the event of excessive monetary growth.
Our constitutional duty is to restrain the government, and we want the BoG to do the same while making sure that its assistance to the government is not illegal or excessive. The Ghanaian people consider this to be a holy mandate.
In light of the Bank of Ghana (Amendment) Act, 2016, we ask the Ministry of Finance and the Bank of Ghana to come clean and seek parliamentary approval (Act 918).
Dr. Cassiel Ato Baah Forson
(MP, Ajumako Enyian Assiem Constituency and Ranking Member, Finance Committee)
July 22, 2022