The Bank of Ghana (BoG) says it has not financed the government with more than GH¢70 billion since 2021 to run the economy.
“At the end of December 2021, claims on government rose to GH¢34.8 billion, and have recently risen further to GH¢40.2 billion at the end of October 2022, reflecting an increase of GH¢5.3 billion in 2022, which was the result of pre-mature unwinding of positions held by some banks,” the BoG said in statement copied to the Ghanaian Times in Accra on Friday.
The statement is in response to claims made by the Member of Parliament for Bolgatanga Central, Isaac Adongo, last week alleging that the BoG had “illegally” financed government to the tune of ¢70 billion or more since 2021.”
The BoG explained that the current total claims on government “Represent the stock of debt held by the BoG and reflect accumulated claims for over 20 years, including legacy assets such as the Telecom Malaysia Bonds issued in relation to the privatisation of Ghana Telecom and Tema Oil Refinery Bonds.”
The statement said at the end of December 2020, the claims on government stock position stood at GH¢34.1 billion and included the GH¢10 billion COVID-19 bond purchased by the BoG.
The BoG explained that its recent disbursement to the government were resources granted by the International Monetary Fund, among others, under the Special Drawing Right (SDR) and Rapid Credit Facility (RCF) programme to help mitigate the impact of the coronavirus pandemic on the economy.
The statement said the SDC and the RCF were denominated in US dollars and revalued in line with exchange rate changes and that the claims had increased by GH¢17.8 billion from beginning of the year to October 2022.
“This reflects a revaluation of these claims in the Bank of Ghana’s books to account for exchange rate developments. This figure does not reflect Bank of Ghana’s lending to government but rather resources from the IMF that were required to be passed on to government in line with approvals by the IMF Board. And the increase in the amount in 2022 does not reflect new cash transactions but rather merely a book-entry figure, driven in large part, by the depreciation of the currency,” it said.
It said due to the downgrade by the international rating agencies, there were no inflows from external sources to support budget implementation this year, and thus the BoG supported government to the tune of GH¢25.6 billion as at October, saying “This support is temporary and consistent with crisis management as we work with the IMF to design a debt operation that will lift the burden of debt servicing off the budget.”
The statement further said, BoG’s total outstanding swaps, repurchase agreements and sale and buy back transactions stood at US$2.4 billion as at end October 2022, of which only US$720 million and was expected to mature by the close of the year.
“We wish to assure the public that the BoG is a reputable institution, which is professional with high standards. We have been recognised and awarded internationally on this score and all operations and policy decisions of the bank are conducted with a high sense of duty and integrity to the best interest of the economy,” the BoG said.
BY KINGSLEY ASARE