The opposition National Democratic Congress has threatened to force out the Governor of the Bank of Ghana from office for what the party calls incompetent performance and a consistent saddling of the nation and economy with debt through “illegal printing of currency”.
It has also urged civil society, including the media, and its Members of Parliament to get ready for an invasion of the premises of the central bank in the next 21 days to send a message to government, the Finance Minister and the Governor and his deputies that the party has had enough of them.
However, as a permanent solution to the vexing matter of deficit financing, the Institute of Statistical, Social and Economic Research (ISSER) has called for the reduction of Bank’s financing of the government budget, saying the BoG deficit financing has implications on money supply, inflation and the exchange rate.
According to ISSER, there is the need to set limits on financing of government.
In its review of the government’s Mid-Year Budget, ISSER said an important facet of formal monetary policy independence is the extent of legal constraint on central bank funding of the government.
It cited Chile as an example, saying, it has the tightest legal restrictions as there is no public expenditure financed directly or indirectly by credit from the central bank (except under wartime conditions).
Again in Germany, Switzerland, and the Netherlands, the legislation sets strict limits on direct central bank credit to government, but allows government paper to be acquired in the course of open market operations.
The Bank of Ghana lost about ¢65 billion in 2022 due to the Domestic Debt Exchange Programme.
“BoG haircut on DDEP was necessary at the time, but what brought us here should not be repeated. Deficit financing of ¢53,150 million out of a total financing of ¢65.156 billion.
“Clear limits on government financing should be set and enshrined in our laws,” the ground recommended.
Total revenue and grants is estimated at ¢98.080 billion (15.9% of GDP), ¢1.238 million higher than the 2022 Mid-Year Fiscal Policy Review estimate of ¢96.842 billion (16.4% of GDP).
These projections, ISSER said, align with trend of revenue inflows as well as the impact of the exchange rate depreciation on forex-related inflows such as Oil and Gas receipts.
Expenditure (on commitment basis), was estimated at ¢159.012 billion. This includes expenditure claims amounting to ¢22.091 billion. Of this amount, ¢11.050 billion relates to energy sector shortfalls due for 2022, while the remaining ¢11.041 billion has been committed under Goods and Services and Domestic Capital Expenditure.
At a press conference held in Accra yesterday, the NDC, together with its Minority Caucus in Parliament, called for the immediate resignation of the Governor Dr Ernest Addison and his deputies.
The Minority Leader, Dr Cassiel Ato Forson, made the call during the NDC’s ‘Moment of Truth’ at the party’s headquarters.
This comes after the central bank, in its Annual Report and Financial Statements, revealed that it recorded a loss of GH ¢60.8 billion in 2022.
He accused the Governor of incompetence in managing the bank, adding that the bank had virtually collapsed.
He claimed that the Governor had recklessly mismanaged the central bank, bringing it to its knees, and that he cannot continue to lead the bank without being held accountable.
“Those who have led these reckless and criminal conduct, unleashed economic hardship and financial distress on the suffering people of Ghana, must be held accountable for this particular action. In fact, impunity of the highest order can no longer be tolerated by the suffering masses of Ghanaians. We must not allow dangerous precedents to be set for future leaders,” he added.
“We are resolved to embark on popular action to occupy the central bank and drive out the team of inept, callous and criminally minded mismanagers of our finances to save the Bank of Ghana,” he said.