Parliament Passes BoG (Amendment) Bill 2016

Parliament has passed the Bank of Ghana (Amendment) Bill, 2016 into law which now mandates the government to borrow 5 percent of revenue generated in the previous fiscal year instead of the 10 percent.

The new law also disallows officials from the Ministry of Finance to be on the Central Bank’s Monetary Planning Committee.

The principal intention of the bill, which was passed on Tuesday, is to prevent the government from borrowing excessively from the BoG that had some serious fiscal consequences on the operations of the bank previously.

The BoG is also required to present semi-annual reports to parliament bordering on its monetary policies.

It is to enable the government concentrate on managing its fiscal policies while the BoG handles the monetary policies without interference from the government.

Briefing the media 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 $918 million from the International Monetary Fund (IMF) to the government.

He said under the new law, the BoG would provide emergency liquidity support to banks, savings and loans and finance houses, which have liquidity problems but are 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.

Before the Bank of Ghana (Amendment) Bill was passed, the New Patriotic Party (NPP) Member of Parliament (MP) for New Juaben South argued that financial assistance should be given to banks and not finance houses and savings and loans companies.

“With this provision, finance houses and savings and loans, in particular, with political connections will take advantage and abuse the law,” he said, indicating that such institutions would always be knocking at the doors of the BoG for assistance.

By Thomas Fosu Jnr