Gov’t Borrowing ¢10 Billion from BoG is Illegal – John Abdulai Jinapor
In his article, he argued that the Government is engaging in an illegality because “Section 30, sub-section 7 of the Bank of Ghana Act, 2002(Act 612) as amended by Act 918 in 2016 states explicitly that; total loans, advances, treasury bills and securities SHALL not at any time exceed 5% of the total revenue of the previous fiscal year”
He indicated that ” from the 2019 Fiscal Data as reported by the Ministry of Finance, the total revenue was approximately GH¢52.9 Billion, therefore 5% of this will amount to GH¢2.6 Billion and not Ghc10 Billion.”
BELOW IS THE WRITE UP BY HON. JOHN ABDULAI JINAPOR
KEN OFORI-ATTA CANNOT BORROW HIMSELF OUT OF HIS OWN ECONOMIC MESS.
The Minister of Finance yesterday presented a statement to Parliament confirming the decision by the Bank of Ghana to lend about GH¢10 billion (One Hundred Trillion Old Ghana Cedis) to the Government of Ghana for 10 years with a 2 year moratorium.
Even before appearing before Parliament, the Governor of the Bank of Ghana had confirmed that the first tranche of GH¢5.5 billion has been advanced to government at a rate of 14.5 percent.
For the avoidance of doubt, Section 30, sub-section 7 of the Bank of Ghana Act, 2002(Act 612) as amended by Act 918 in 2016 states explicitly that; total loans, advances, treasury bills and securities SHALL not at any time exceed 5% of the total revenue of the previous fiscal year.
From the 2019 Fiscal Data as reported by the Ministry of Finance, the total revenue was approximately GH¢52.9 Billion, therefore 5% of this will amount to GH¢2.6 Billion and not Ghc10 Billion.
It is therefore illegal and a clear violation of the Bank of Ghana Act and Public Financial Management Act for the BoG to purport to lend GH¢10 Billion to the Government.
As if that is not enough, the said amount of GH¢5.5 Billion has been advanced without approval from Parliarment; a clear violation of article 181 of the 1992 constitution.
It is equally instructive to note that Section 30, sub-section 3 states that; “An advance made under sub-section (I) shall be repaid within three months after the grant of the advance”.
The critical question to ask is; on what legal basis is BoG advancing such a huge loan to be repaid over a period of 10 years.
The Akuffo-Addo led Government has certainly run out of ideas and hiding behind the COVID-19 pandemic to deplete our reserves including the Petroleum Funds.
Parliament must ensure that the Executive Arm of Government does not engage in a reckless management of our financials as we approach the 2020 elections.
Rather than engaging in such wasteful and frivolous expenditures, the Akufo Addo/Bawumia Economic Management Team must prioritize expenditure in order to protect the national purse.
The statistics show that Ghana’s current debt as a percentage of GDP is in excess of 60% with the IMF projecting end of year 2020 Debt to GDP at about 67% which will be unsustainable.
As the saying goes..”there is no free lunch”
John Abdulai Jinapor (MP)
Yapei-Kusawgu Constituency
