BoG denies borrowing to gov't beyond required limit

The Bank of Ghana (BoG) has denied reports suggesting that it allowed government to borrow from the institution beyond the required limit.

The 2011 Auditor General's Report cited the central bank for several breaches of the Banking Act.

This includes exceeding a 10% limit on government's borrowings from the bank, as well as a failure by the bank to charge the required interest on some loans.

But answering questions at Parliament's Public Accounts Committee (PAC) sittings, Head of Internal Audit at Bank of Ghana, Felix Adu, noted managers of the central bank had some issues with the report.

According to Mr Adu, references cited as basis for claims that the Bank of Ghana erred in granting a loan to government are inaccurate.

Quoting from Section 30(2) of the Banking Act he read out:

"The total of the loans, advances, purchase of treasury bills and securities together with monies borrowed by the government from other banking institutions and the public at the close of the financial year under section one shall not exceed 10% of the total revenue of the fiscal year in which the advances were made" explaining the 10% cap is not limited to Bank of Ghana alone.

"We didn't break the rules. That section [cited in the Auditor General's report] is talking about the whole system", he said.

But Victor Boglar who did the report on behalf of the Auditor General, says they still stand by their position.

According to him, the issue had been discussed with the central bank management already.

"It is our view that the revised loan and fiscal agency agreement will address the concerns raised [in the report]", he said.

He said the 2011 Auditor General's report focused on Bank of Ghana only.