The purpose of the amended bill, which was read the third time and passed yesterday evening, is to prevent the government from excessive borrowing from the BoG.
As a result, the amount of money the government can borrow from the Central Bank has been reduced from 10 per cent of its current year’s revenue as contained in the previous BoG Act 2002 to five per cent of its previous year’s revenue.
The amended bill has also eliminated the clauses that allowed officials from the Ministry of Finance to be part of the Central Bank’s Monetary Planning Committee (MPC).
The purpose is to limit the government to concentrate on managing its fiscal policies while the Bank of Ghana handles the monetary policies without interference from the government.
Under the new law, the BoG is also required to present Semi Annual Reports bordering on its monetary policies to Parliament.
Briefing reporters after the passage of the BoG (Amendment) Bill, a Deputy Minister of Finance, Cassiel Ato Forson, said the enactment would fast track the release of the fourth tranche of the US$918 million from the International Monetary Fund (IMF) to the government.
He said under the new bill, the BoG would provide emergency liquidity support to banks, savings and loans and finance houses which were illiquid but solvent.
“A financial institution can be solvent but have liquidity challenges. We should not allow financial institutions which are solvent to collapse simply because they are having liquidity challenges. The Central Bank should be able to support them,” he said.
However, the Member of Parliament of New Juaben South, Mark Assibey Yeboah, who vehemently opposed the provision on the floor during the consideration of the bill, told The Ghanaian Times in an interview that providing emergency support to the financial institutions would be disastrous.
“With this provision, finance houses and savings and loans in particular with political connections will take advantage and abuse the law,” he said and indicated that such institutions would always be knocking at the doors of the BoG for assistance.
He tried to convince the House to allow the BoG to provide assistance to only the banks and not the finance houses and savings and loans companies but was not successful.
By Yaw Kyei