By: Eric Murphy Asare

Dr. Richmond Atuahene, a financial consultant says BoG's explanation that the crisis that the country found itself in last year meant that the central bank lending was critical “to avert a disorderly default of both servicing for domestic and external debt.” is backed by the Bank of Ghana Act 918 section 16 as amended.

In an interview with Omanhene Yaw Adu Boakye on Sompa Tv/Fm on Friday, February 10th, 2023, Dr. Atuahene said the government has the borrowing right to seek financial backing from the Bank of Ghana based on the Act however, the Bank of Ghana cannot lend the government more than 5% of its previous total revenue.

“When the government is in a financial crisis and cannot pay its debtors, the law permits it's going to the bank of Ghana for financial support when it's within the 5% of its previous total revenue and it's backed by the Bank of Ghana amended act 918, section 15 as amended in 2016”.

He further explained that as much as the government can borrow from the BoG in crisis, anything more than 5% of its previous total revenue must go through parliament for approval and ratification.

“It says that the government can borrow 5% of its total revenue in the previous years and if it's exceeded, the minister of finance should go to Parliament for approval and ratification.

According to Mr. Atuahene, the physical responsibility act that the Bank of Ghana is acting upon has nothing to do with the printing of 43 billion cedis in 2022 which the finance minister says it's an approval from the International Monetary fund (IMF) however, Mr. Atuahene says the physical responsibility act is the total government deficit that is not more than 5% which the minister of finance went to parliament for clarification ahead of the 2020 Covid 19 fund and has got nothing to do with the Bank Of Ghana printing of money to support the government.

Mr. Atuahene says if the 43 Billion cedis printed money in 2022 to finance government is more than 5% of its previous total revenue then the minister of finance should go to parliament for approval and ratification.

He cautioned that the Debt Restructuring program tends to affect the economy and can badly affect purchasing power; banks will be oppressed because banks can no longer lend and that will affect investors

Source//Sompaonline.com//Gh.