BoG’s GHS10 billion loan to GoG illegal – Jinapor

Former Deputy Minister of Energy under the erstwhile Mahama-led administration John Jinapor has said it is “illegal and a clear violation” of the Bank of Ghana (BOG) Act for the Central bank to lend GHS10 billion to Government.

Minister for Finance, Ken Ofori-Atta on Friday, 29 May 2020 in a statement presented to Parliament confirmed the BoG’s decision to lend GHS10 billion to government with a 2-year moratorium for 10 years.

Governor of the Central Bank had earlier confirmed before the appearance of Mr Ofori-Atta in parliament that, the first tranche payment totalling GHS5.5 billion at the rate of 14.5 percent had been made to government.

In a write up by the former Deputy Minister, Mr Jinapor said: “For the avoidance of doubt, Section 30, sub-section 7 of the Bank of Ghana Act, 2002(Act 612) as amended by Act 918 in 2016 states explicitly that; total loans, advances, treasury bills and securities SHALL not at any time exceed 5percent of the total revenue of the previous fiscal year.

“From the 2019 Fiscal Data as reported by the Ministry of Finance, the total revenue was approximately USD52.9 Billion, therefore 5percent of this will amount to USD2.6 Billion and not USD10 Billion.”

According to Mr Jinapor: “It is therefore illegal and a clear violation of the Bank of Ghana Act and Public Financial Management Act for the BoG to purport to lend GHS10 Billion to the Government.”

He also noted that “as if that is not enough, the said amount of GHS5.5 Billion has been advanced without approval from Parliarment; a clear violation of article 181 of the 1992 constitution.”

He further indicated that Section 30, sub-section 3 states that: “An advance made under sub-section (I) shall be repaid within three months after the grant of the advance”.

Source: Class FM