Governor of the Bank of Ghana (BoG), Dr. Ernest Addison, has debunked claims that the Bank finances government every year.
According to him, the Central Bank has been engaged in zero financing in 2017, 2018, 2019 and 2021. He stated that financing of government policies a year prior was undertaken with an earlier consultation with the International Monetary Fund (IMF).
“It is not true that the Bank of Ghana has been providing financing for government every year… The Bank of Ghana has only had to support in the pandemic year of 2020 and in the crises year of 2022.”
Dr Ernest Addison
Dr Addison explained that the BoG Act has amended limits financing of the government to 5% of the previous year’s tax revenue. He explained that the provision in the law has been adhered to since he took office in April 2017.
“Between 2017 and 2019. In addition to the requirement of the Act, the bank signed a Memorandum of Understanding with the Ministry of Finance to even impose the tighter restriction of zero Central Bank financing and this was observed strictly even though the MOUs were not legally binding.”
Dr Ernest Addison
Commencement of BoG new head office
Speaking at a press conference, today, August 21, 2023, the BoG Governor highlighted that the challenge of COVID 19 in 2020 and the difficulties in going to the capital market to raise money made it difficult for the Central Bank to ignore the government during the economic crisis.
Also, he noted that losing access to the international capital market for new financing immediately triggered a liquidity crisis for Government, “spilling over into a balance of payments crisis as the country had to continue to honor its debt service obligations, energy payments, and import bill”.
On the issue of the controversy surrounding the new BoG head office, Dr Addison stated that the decision to construct the structure would not have been taken under the current circumstances. He revealed that the project has been in the works for the past three years.
“The decision to commence construction was taken in 2019 when the Bank generated profits. Appropriations for the Head Office were made each year from profits in 2019, 2020, and 2021… The DDEP only took place in January 2023. If we were to be taking the decision today, building a legacy Head Office would not have been a priority. However, this is a project that has been running for 3 years and about 50 percent complete.”
Dr Ernest Addison
Furthermore, he underscored that the Bank is fully aware of its responsibilities to ensure that the costs do not escalate beyond reasonable levels and that many of the original design features to including data centre, currency processing centre, ICT equipment, specialized security features have been deferred and only grey boxes provided for future use to manage costs.
To this end, Dr Addison noted that the new building has sensitive features which the current office does not have, and that these features will include data centres, and currency processing centres, among others.
“The Bank then began to plan the building of its new head office taking into consideration the need to ensure that the building meets all the requirements of a modern central bank of international standards similar to central bank head office buildings in Abuja and Dakar, and include provision for data centres, currency processing centres, volts and other sensitive installations. So, it is not just a simple ordinary building.”
Dr Ernest Addison
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