John Kumah, a Deputy Minister of Finance cum member of parliament (MP) for Ejisu, has refuted assertions made by the Minority Caucus that the Bank of Ghana (BoG) will be assisted by the introduction of a recapitalization levy.
The bank’s investments in marketable securities, fees and charges on all government payments, as well as earnings from non-marketable holdings of the bank, he claimed, made up the bank’s primary source of income, refuting the idea that it received its money from commercial activities only.
Also, he asserted that the decline in government transactions would automatically result in a decline in the bank’s income; adding that the debt restructuring resulted in lower earnings on their holdings of marketable and non-marketable bonds.
The Bank of Ghana’s Governor, Dr. Ernest Addion, as well as his two deputy governors, have all been called to resign by the Minority. However, in response to the Minority, John Kumah issued the following statement: “Ignore this funny NDC Propaganda about the collapse of the Bank of Ghana (BoG). BoG is Solid! The NDC is funny! It’s not true that a recapitalization levy is to be introduced for BoG, the Central Bank hasn’t collapsed.”
“Beyond this, the Bank is solid and is capable of performing its core function. Article 183 clause 2 (c) of the 1992 constitution enjoins the Bank of Ghana to promote and encourage economic development in the country. Hence, there is nothing untoward in the actions of the Central Bank to support the state in its economic recovery efforts.
“It is important to further highlight that a negative balance sheet by a Central Bank is not unusual. In fact, most Central Banks around the world run negative balances to achieve the overall economic anchor objectives of a Central Bank. History clearly illustrates this. Several central banks had negative equity yet fully met their objectives – for example, the central banks of Chile, Czechia, Israel and Mexico experienced years of negative capital.”
John Kumah
Moreover, he declared that despite everything, there was continued pricing and financial stability. He said that a central bank’s credibility depended on its capacity to carry out its mandates, citing Nordstrom and Vredin (2022), and added that losses did not put that capacity in jeopardy because they were occasionally the price to be paid for attaining its goals.
“Such propaganda and unnecessary attacks at the central bank only result in increased market volatility, panic selling of assets, and can trigger a chain of events that can affect our overall economic stability.”
John Kumah
MP Bemoans Gov’t For Leading BoG Into Ditch
On the other hand, Eric Opoku, MP for the Asunafo South Constituency, backed the NDC’s demand that Dr. Ernest Addison, Governor of the Bank of Ghana, and his two deputies resign.
The MP argued that the opposition party’s 21-day deadline was sufficient. According to him, the Central Bank’s failure to fulfill its two main mandates made the call for the Governor to resign valid.
“Since the GetFund was setup under Rawlings time, he did not use it as collateral for a loan to increase the country’s debt. President Kufuor, President Mills and President Mahama all did same. Only Nana Addo has been using it and adding up to the country’s debt.
“I believe the 21 days which is equivalent to three weeks is enough. All over the world, the work of the Central Bank is that it ensures we have price stabilization, financial stabilization which allows persons have easy access to loans, and all other banks are run at ease. BoG has failed at doing these two things.”
Eric Opoku
Furthermore, he stated that Ghana’s recent financial crisis is partly due to the bank’s poor management. According to him, the government abused the stabilization and emergency funds, eventually bankrupting the Bank of Ghana by demanding further local currency injections, and suffered losses of about GHC 60 billion.
“When government exceeds the 5% threshold for loans given by the Bank of Ghana, it is supposed to write a letter to Parliament and the Finance Minister to notify us. We didn’t hear anything from them.
“Bank of Ghana has written off GH48B debt government owes them and now Ghanaians owe the debt, which contradicts a law on writing off debts which allow only Ghanaians to approve of any write-offs carried out by the Bank of Ghana.”
Eric Opoku
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