BoG can’t sit aloof for the economy to crumble but lessons have been learned – Quartey.

Professor Peter Quartey, the director of the University of Ghana’s Institute of Statistical, Social, and Economic Research (ISSER), has outlined possible causes for the Bank of Ghana’s (BoG) decision to back the administration.

He claimed that if the nation is hit by a catastrophe, the central bank cannot watch helplessly as the economy collapses. However, he demanded that the BoG’s choice to support the government be subject to regulation.

Prof. Quartey added that problems that led to the financial difficulties the BoG is experiencing shouldn’t be allowed to reoccur.

He blamed the issues on the government’s choice to borrow more than was necessary.

Prof. Quartey said to reporters during a post-mid-year budget review event conducted at the ISSER on Tuesday, August 8, that the Bank of Ghana intervened to help the government because it could not stand by and let the economy collapse.

“Sometimes, these actions are taken for valid reasons. When we implement structures and laws, it would assist to minimize, but if we allow discretion and occasionally if we are hit, the Bank cannot sit aloof and let the economy collapse; it must act.

“So the Bank is attempting that, but I believe that what got us there shouldn’t happen again. That, in my opinion, is the most important factor: We borrowed more than was necessary, and we should not make the same mistake twice, he said.

Godfred Bokpin, a professor at the University of Ghana Business School, expressed his opinions on the struggles of the BoG and claimed that by exposing itself excessively to the government to provide financial support, the Bank knowingly compromised its independence and sold its birthright.

Prof. Bokpin blamed the central bank’s current financial issues on their excessive exposure to the government.

He said that the central bank’s financial difficulties are eroding investor confidence in the financial industry.

He felt that Dr. Ernest Addison, the Governor, ought to have resigned by this point.

“We’re eroding people’s faith in our banking system. Keep in mind that even if the central bank had a policy of being solvent, our system’s confidence would not be fully restored. When you consider what has happened to the banks, you will see that many of them have had to change their line of credit to align their banking with external trends.

“I think the governor may have taken his advice and resigned by now in any reasonable society. In a prior interview with Alfred Ocansey, which was carried on the Ghana Tonight program on TV3 on Tuesday, August 8, he said, “I think the central bank willfully surrendered its independence, sold its birthright to the government, even though they find themselves in the circumstance.

The resignation of the Governor and his two appointees, Dr. Maxwell Opoku-Afari and Elsie Addo Awadzi has also been asked by the minority in parliament.

This came after Minority Leader Dr. Cassiel Ato Forson said that Dr. Addison was spending $250 million to construct a new central bank headquarters at a time when the Bank was having financial issues.

Due to the lack of funds at the BoG, Dr. Forson charged that the Governor had printed money to fund this endeavor.

Dr. Forson stated, “The Bank of Ghana does not have money, but spending GHS250 million for a new head office means he is printing additional money to finance this project.”

After stating that the governor merely prints money to sustain the government’s expenditures, he further granted the Governor and his two deputies up to 21 days beginning today, Tuesday, August 8, to quit.

“We must remove this governor so that we may elect a new leader. At a press conference on Tuesday, August 8 in Accra, he declared, “If we permit him to remain in the office, we will establish a poor precedent for future managers to do the same.

Dr. Forson emphasized, “He has messed us so much that we cannot wait to see his back.”

“We demand that the governor and his deputies resign immediately and within 21 days. If he doesn’t rule, we’ll march to occupy the government building to defend the Bank of Ghana. Accountability will be ensured by March, he said.

Dr. Forson’s remarks come in response to the BoG’s loss of GHS60.8 billion.

According to the Bank, this is because the Government of Ghana’s securities holdings, worth 48.45 billion dollars, loans and advances given to quasi-government and financial institutions, worth 6.12 billion dollars, and the depreciation of the local currency, which resulted in a net exchange loss of 5.27 billion dollars, have all been impaired.

The loss was caused by the Domestic Debt Exchange Program of the Government of Ghana.

The BoG claims that its Board of Directors and Management evaluated the effects of the negative net worth position on policy solvency as well as the group’s capacity to continue to make enough money to pay for its monetary policy operations and other operational expenses.

The directors believe that the Central Bank will continue to operate as a going concern due to several factors supported by expectations of a better macroeconomic environment and specific policy actions aimed at strengthening its balance sheet.

The Central Bank described these steps that it thought would aid in its recovery in its Annual Report.

Included among them is the retention of profits to aid in capital reconstruction until equity firmly returns to the positive region.

refraining from financially supporting the budget of the Ghanaian government. A Memorandum of Understanding on Zero Financing of the Budget was signed on April 26, 2023, by the Bank of Ghana and the Ministry of Finance, signaling that action has already been taken in this regard;

taking quick action to boost efficiency and earnings by optimizing the Bank of Ghana’s investment portfolio and operating cost mix;

evaluating whether the government could need to provide recapitalization support in the medium- to long-term

The Board of Directors and Management further stated that they believed that “ongoing efforts to restore macroeconomic stability and debt sustainability, in addition to long-term efforts to build reserves, provide enough basis for continued operational policy efficiency existence for the foreseeable future.”

shown that the financial difficulties the central bank is having are eroding financial sector trust.

He felt that Dr. Ernest Addison, the Governor, ought to have resigned by this point.

“We’re eroding people’s faith in our banking system. Keep in mind that even if the central bank had a policy of being solvent, our system’s confidence would not be fully restored. When you consider what has happened to the banks, you will see that many of them have had to change their line of credit to align their banking with external trends.

“In any civilized society, I think the governor might have taken his advice and resigned by now. Even though they are in this predicament, I believe the central bank sold its birthright to the government and compromised its independence on purpose, he stated in a prior interview with Alfred Ocansey that was aired on the Ghana Tonight program on TV3 on Tuesday, August 8.

The Governor and his two appointees, Dr. Maxwell Opoku-Afari and Elsie Addo Awadzi, have all been called on to resign by the minority in parliament.

This came after Minority Leader Dr. Cassiel Ato Forson said that Dr. Addison was spending $250 million to construct a new central bank headquarters at a time when the Bank was having financial issues.

Due to the lack of funds at the BoG, Dr. Forson charged that the Governor had printed money to fund this endeavor.

Dr. Forson stated, “The Bank of Ghana does not have money, but spending GHS250 million for a new head office means he is printing additional money to finance this project.”

After stating that the governor merely prints money to sustain the government’s expenditures, he further granted the Governor and his two deputies up to 21 days beginning today, Tuesday, August 8, to quit.

“We must remove this governor so that we may elect a new leader. At a press conference on Tuesday, August 8 in Accra, he declared, “If we permit him to remain in the office, we will establish a poor precedent for future managers to do the same.

Dr. Forson emphasized, “He has messed us so much that we cannot wait to see his back.”

“We demand that the governor and his deputies resign immediately and within 21 days. If he doesn’t rule, we’ll march to occupy the government building to defend the Bank of Ghana. Accountability will be ensured by March, he said.

Dr. Forson’s remarks come in response to the BoG’s loss of GHS60.8 billion.

According to the Bank, this is because the Government of Ghana’s securities holdings, worth 48.45 billion dollars, loans and advances given to quasi-government and financial institutions, worth 6.12 billion dollars, and the depreciation of the local currency, which resulted in a net exchange loss of 5.27 billion dollars, have all been impaired.

The loss was caused by the Domestic Debt Exchange Program of the Government of Ghana.

The BoG claims that its Board of Directors and Management evaluated the effects of the negative net worth position on policy solvency as well as the group’s capacity to continue to make enough money to pay for its monetary policy operations and other operational expenses.

The directors believe that the Central Bank will continue to operate as a going concern due to several factors supported by expectations of a better macroeconomic environment and specific policy actions aimed at strengthening its balance sheet.

The Central Bank described these steps that it thought would aid in its recovery in its Annual Report.

Included among them is the retention of profits to aid in capital reconstruction until equity firmly returns to the positive region.

refraining from financially supporting the budget of the Ghanaian government. A Memorandum of Understanding on Zero Financing of the Budget was signed on April 26, 2023, by the Bank of Ghana and the Ministry of Finance, signaling that action has already been taken in this regard;

taking quick action to boost efficiency and earnings by optimizing the Bank of Ghana’s investment portfolio and operating cost mix;

evaluating whether the government could need to provide recapitalization support in the medium- to long-term

The Board of Directors and Management further stated that they believed that “ongoing efforts to restore macroeconomic stability and debt sustainability, in addition to long-term efforts to build reserves, provide enough basis for continued operational policy efficiency existence for the foreseeable future.”

Source:3News.com