Members of Parliament’s Minority claim they will oppose Finance Minister Ken Ofori-Atta’s attempt to sign a Memorandum of Understanding (MoU) with the Bank of Ghana for zero government financing.
Haruna Iddrisu, former Minority Leader of Tamale South MP, condemned the MoU between the Bank of Ghana and the Ministry of Finance as “laughable” for the country.
“A serious country must be run seriously, with a legal framework that protects the State and its institutions.” The Bank of Ghana is in violation of the modified Bank of Ghana Act by having to overdraft and lend to the government beyond the stated legislation.
“But MoU, what is the weight of MoU within the parameters of the Ghanaian constitution and Ghanaian law?” he questioned.
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The politician told Joy News’ Elton Brobbey that the Finance Minister must be present in Parliament for legislation on the Bank of Ghana’s zero percent financing of the government.
As a result, he stated that anything less than legislation passed by parliament will be rejected.
The International Monetary Fund is requesting that the government engage into a formal arrangement with the Bank of Ghana for zero funding of government programs, among other things.
According to the central bank, the bank supplied about GH40 billion in support to the government in 2021, and the funding spared the economy from collapse.
Finance Minister, Ken Ofori-Atta on the sidelines of the IMF/World Bank meetings told JoyNews that government has signed a Memorandum of Understanding (MoU) in compliance with the IMF order.
Meanwhile, the Ghana Association of Banks says its members will henceforth grant loans to only productive projects as it defends its decision to participate in the domestic debt exchange programme.
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This is despite the participation resulting in severe impairment of the assets of the institutions with some nearing insolvency.
CEO of the Association, John Awuah says participation was necessitated by a desire to save the economy from collapsing.
..we took a stage or we took a position that as a financial system certainty or some form of stability was extremely important. Are we going to sacrifice stability on the altar of pushing and pushing to get what?
“And if you get to that level where you’ve pushed the date from September to January to February to March to April, and the economy is tanking, you operate within the economy. Your certainty results in significant disruption in the economic performance, of course, then you’ll be holding instruments that you call bonds but will be more or less worthless. That is why we took the position as an industry that we want to be part of the solution,” he explained.
He however admits this situation means banks will have to be careful in granting loans to customers.
