Governor of the Bank of Ghana, Dr. Ernest Addison
Isaac Adongo, Member of Parliament (MP) for Bolgatanga Central Constituency has raised red flags over an intention by the Governor of Bank of Ghana to surrender $300 million of the Special Drawing Rights (SDR) to the government to support its budget expenditures for 2022.
The BoG Governor, Ernest Addison disclosed at a press briefing that $300 million from the International Monetary Fund support scheme called the Special Drawing Rights (SDR) will be surrendered by BoG to the Government to fund the 2022 budget expenditures.
The International Monetary Fund established a $650 billion increase in special drawings rights (SDR) of several member countries.
Central Banks of member countries received the funds to augment their foreign reserves that have been constrained by COVID-19’s disruption of global supply chains and its attendant effects on foreign inflows from exports.
In a letter by the Bolgatanga Central NDC MP to the Governor of Bank of Ghana seen by Mynewsgh.com, Adongo averted the mind of Addison to what he says will amount to financial management infractions if the said amount of $300 million is ceded to the government to support the 2022 budget as disclosed.
“Mr Governor, it is most unfortunate and a perverse interpretation of the rules that govern your mandate. Considering the many events of the past, including the willful misreporting of key government indicators by your organisation, it will not be far-fetched to suggest that you are willing to surrender your fiduciary responsibility to protect the resources of BOG and uphold its laws. While reminding you that such conduct has dire consequences, let me draw your attention to crucial compliance issues you are conveniently seeking to sidestep,” Mr Adongo stated in the letter.
He continued: “SDRs are only an equivalent in a trading currency and cannot be converted into cash in any currency without interest accruing to the country that holds that currency as its proprietary legal tender. The IMF provides daily interest rates and currency conversion rates for SDRs.
“As you may be aware, Ghana stands to pay interest on its shortfall of the initial holding of SDRs released to it by the IMF. Your view that SDRs constitute ‘free money’ to be distributed at your discretion, based on a convoluted interpretation of the laws of Ghana and best international practice, must be reconsidered”.
Adongo further argued that the move to surrender the said amount to the government is in breach of several Acts including the Public Financial Management Act, The Bank of Ghana Act, 2002 (Act 612) and its Amendment, 2016 (Act 918).
“I am aware of various arguments advanced to suggest that the peculiarities introduced by covid-19 justify the setting aside of the laws of Ghana. I may have considered this argument worthy if the existing laws that moderate your mandate at the Governor did not provide for such ‘crisis’ scenarios. You may be aware that the Bank of Ghana Act, 2002 (Act 612) provides in section 30(6) that in the event of an emergency, the Governor, the Minister and the Controller and Accountant General shall meet to decide the limit of borrowing that Government should make following which the responsible Minister (of Finance) shall submit a report on the issue to Parliament within seven sitting days.
“There is no contestation that your support to the Government exceeded the allowable five percent threshold as per the laws you swore to abide by. Typical of this Government, and with your overt support, the requirement to seek prior parliamentary approval within seven days has been conveniently overlooked.
“In my search, I have found no public record or other evidence of a meeting organised to set a borrowing limit, nor have I seen any evidence of a report submitted to Parliament, in this regard, within the stipulated seven working days.
“If you chose to argue that Act 918 makes the provision in Act 612, section 30(6) redundant, then note also that Section 30(7) of the amendment Act, 2016 (Act 918) provides that where the total of loans, advances, purchases of treasury bills and securities made under subsection (1) is 5% of the previous fiscal year’s total revenue, the Governor shall notify the Minister and Parliament of the attainment of the limit under subsection (2) and the Minister upon notification shall report to Parliament of the remedial measures to be taken.
“The BOG Act and its Amendment Act do not provide for freebies from BOG to Government. Instead, it imposes responsibility on you to report to the Minister anytime the 5% threshold is exceeded. The finance minister then reports to Parliament with a clear program to remedy the violation. Unfortunately, these have not been complied with,” Adongo explained.
The MP told the BoG governor that offering of $300million of the Special Drawing Rights received by the regulator to the Government will aggravate the breaches of the 5% threshold support as stipulated in the Bank of Ghana Act.
He said: “If you were unaware of the provisions of your own Act, I do hope that my letter draws your attention because willful breaches of the law do have consequences, usually dire. Also, bear in mind that I reserve the right, as a citizen and Member of Parliament, at a time of my choosing to activate legal action that may crystalize such legal consequence.
“I will strongly urge you to remedy your earlier plethora of breaches of the BOG laws. While I understand the unbearable pressure you may be experiencing from the Executive arm of Government to disregard your own laws, please be mindful of the potentially dire consequences and remain resilient”.