Dr. Ernest Addison, the Governor of the Bank of Ghana (BoG), has expressed the need for clarification in the existing Act that governs the operations of the central bank. He specifically highlighted the lack of a clear definition for emergencies, urging for a careful and precise delineation of the conditions under which rules can be bypassed.
“First is the issue of when you talk about 5 percent measurement, is it a stock measurement? At any time the central bank has claims on the government from 20 years ago so is it that we have a stock claim of 5 percent of the previous year’s revenue or is it the flow starting from a particular period of time?
Also Read: GBC employees outraged by the Fair Wage Directive.
“How are you going to access that flow relative to the previous year’s revenue of 5 percent? So there are measurement issues there that need to be clarified.”
He added “There is the issue of emergency. What do you call an emergency? Let us define it very carefully and to make it clear the conditions under which the rules can be breached.
“Then even procedural issues in the law are not very clear. Who does the reporting to Parliament? Is it the Governor or the Minister of Finance? All of these issues have to be clarified. In any case, in the Bank of Ghana, most of our reporting to Parliament is done through the Ministry of Finance so the Governor doesn’t have really direct reporting obligations to Parliament. For me, it is not very clear so all of those issues have to be properly clarified in the law.
“I believe that there is the need for those but even if you have the most perfect law, what happened in 2022 would not have been different because the choice would have been either to grind the entire economy to a halt, allow government operations to come to a standstill which is worst than the problem itself so the issue of the law is fine but in an economic crisis things have to be done differently”
During the 112th Monetary Policy Committee (MPC) press conference held in Accra on May 22, Dr. Addison was asked why the Act was being revised instead of introducing an entirely new one. In response, he pointed out that although attempts were made to improve the current Act in 2016, inconsistencies and challenges in implementation persisted. The International Monetary Fund (IMF) had also recommended the revision of the Bank of Ghana Act.
Also Read:Free SHS Policy was targeted poorly -IMF
The objective of revising the Act is to enhance the independence of the central bank and mitigate government’s excessive influence over fiscal matters. The IMF emphasized that the amendments would introduce mechanisms to monitor and enforce compliance, as well as provide a clear definition of emergency situations in which the limits could be temporarily lifted.
