The Ranking Member of the Finance Committee of Parliament, Isaac Adongo, has urged the House to commence investigations into the activities of the Bank of Ghana (BoG) for losing up to GH¢55 billion in equity and recording a negative reserve in one year.
“Since 1967, if we add all the losses that the BoG has ever suffered, it’s nowhere near the GH¢70 billion that it has incurred in one year,” he said on last Tuesday at the commencement of debate on the mid-year budget review presented by the Finance Minister, Ken Ofori-Atta, last Monday.
The Bolgatanga Central MP said the ramifications of what the BoG had done would not be felt now but several years to come.
Tree of life
Mr Adongo said throughout the world, central banks were established as “Trees of Life” because they helped to cure major ailments of an economy.
“The tree of life is what is used to cure inflation, higher interest rate, high depreciation, and when the financial sector is unstable, it is still that tree of life that we resort to,” he said.
He alleged that after four months of noncompliance, the auditors of the bank came to say that “the tree has been cut and burnt to ashes.”
“When questioned why they have not reported till last Friday, the auditors said the Governor and the Board of Directors said that they had not uprooted the roots so when we continue to water it, it will rejuvenate,” he said amid laughter by his colleague Minority members.
The ranking member said that with the GH¢70 billion loss in reserve, even if one was not going to impair BoG’s debt which was GH¢48 billion, there would still be a loss of GH¢22 billion.
“So, the problem is not the impairment of government debt.
The problem is the reckless management of BoG, and we must pay attention to the bank,” he alleged.
The MP opined that banks were forced to keep money at the BoG so that on a rainy day, BoG could support them. Unfortunately, however, the money has disappeared.
He further alleged that BoG had been borrowing to stabilise the cedi, however, that money was also gone.
Currently, Mr Adongo said BoG could not take monetary action without borrowing or printing money, saying it printed GH¢80.57 billion to shore up the economy.
Indeed, that amount, according to the auditor’s report, was an impairment in investment in government security.
“Mr Speaker, the government has compromised the future of these children (Referring to some visiting children in the gallery).
Some of you will be praying to work at BoG one day.
Please, don’t go there, because it is gone,” he warned.
The ranking member said he would have applauded the finance minister if he had managed the economy well, “but he came to sing funeral dirges.”
“He read the tribute of a dead economy.
The economy at half year was growing at 4.2 per cent.
But the minister said it ended the year at 1.5 per cent.
“Why is he going to put the economy in reverse gear? Is that the only gear he knows?
He said the policy rate had been increased to 30 per cent and inflation had reduced to 42.5 per cent, saying these were features of a dead economy.
Mr Adongo said as of June the depreciation of the currency was 29.9 per cent but by the end of the year the net international reserve would cover less than one month.
Responding to the allegations made by Mr Adongo, the Deputy Minister of Finance, Abena Osei Asare, said truth was sacred.
“You can’t take a financial statement and misinterpret it.
Data and truth are sacred,” she said forcefully.
She said that saying BoG supported the government with GH¢80 billion was incorrect.
According to her that figure dated back two decades ago.
The deputy minister said that from 2017 to 2019, there was zero financing from BoG.
She said it was only in 2020 that the bank did so as a result of the COVID pandemic which necessitated the government to go for a GH¢10 billion loan.
Mrs Asare said there was zero financing in 2020 and 2021.
“This is data; this is truth.
I urge those in the gallery not to fall for the views of the Minority.
She admitted that 2022 was very tough, and for the Minority to pretend that was not the case was unfortunate.
The deputy minister said the situation worsened because of the Russia-Ukraine war.
“Unless you are telling me that is not true.”
She admitted, though, that in 2020, the BoG supported the government with GH¢37 billion overdraft, and not the GH¢80 billion stated by Adongo.
“In 2017, when some of the banks went into solvency, the government supported BoG with GH¢25 billion to enable it to address the issue,” she explained.