BoG clears air over alleged "$1.5bn" cash printing

RE: NDC DEMANDS $1.5 BILLION FROM CENTRAL BANK

1. We refer to your recent publication on the above, which stated among others that the Minister of Finance had written to the Governor of the Bank of Ghana to “… print extra money in excess of 2 billion Ghana Cedis and that the outgoing Governor, Dr Paul Acquah was resisting every pressure to print such high amounts of Cedis to worsen the country’s already bad inflationary pressures …”

2. As in most Central Banks, the Bank of Ghana is the fiscal agent and banker of government. The framework for its dealings with government is provided in the Bank of Ghana Act 2002, Act 612. Therefore, the Bank of Ghana can be requested to assist government to streamline its finances and budgetary activities due to the occasional lack of synchronisation between government revenue flows and expenditures as happens in most countries.

3. In the particular case that is the subject matter in your publication, government sought the general assistance of the Bank of Ghana, as normal practice, to raise GH¢1.5 billion over a period to augment its fiscal resource base so as to meet outstanding arrears that accumulated in 2008 and were not known at the time of preparing the budget. The amount was to be raised over a period of time so as not to compromise macroeconomic stability.

4. Indeed, there are several alternative ways by which the Bank assists government in such cases. For example, the Bank may decide to float government bills or issue bonds to the domestic market on behalf of government, or the Bank may grant temporary advances to government subject to the statutory limits provided in Section 30 of Act 612.

5. In each case, the Bank of Ghana ensures that the appropriate financing method is used, that will not impact adversely on macroeconomic stability. In any case, it is even not feasible or prudent to print currency of such magnitude in such a short period of time.

6. However, for your subsequent publications relating to similar transactions involving the Bank of Ghana, please feel free to cross-check your facts by contacting the Secretary of the Bank.

SIGNED:

MR. ALEX BERNASKO THE SECRETARY