Jinapor writes: GHC 10billion “illegal loan” cannot save Ofori-Atta’s “economic mess”
The Minister of Finance yesterday presented a statement to Parliament confirming the decision by the Bank of Ghana to lend about GH¢10 billion (One Hundred Trillion Old Ghana Cedis) to the Government of Ghana for 10 years with a 2-year moratorium.
Even before appearing before Parliament, the Governor of the Bank of Ghana had confirmed that the first tranche of GH¢5.5 billion has been advanced to government at a rate of 14.5 per cent.
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 5% 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 GH¢52.9 Billion, therefore 5% of this will amount to GH¢2.6 Billion and not Ghc10 Billion.
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 GH¢10 Billion to the Government.
As if that is not enough, the said amount of GH¢5.5 Billion has been advanced without approval from Parliament; a clear violation of article 181 of the 1992 constitution.
It is equally instructive to note 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”.
The critical question to ask is; on what legal basis is BoG advancing such a huge loan to be repaid over a period of 10 years?
The Akuffo-Addo led Government has certainly run out of ideas and hiding behind the COVID-19 pandemic to deplete our reserves including the Petroleum Funds.
Parliament must ensure that the Executive Arm of Government does not engage in reckless management of our financials as we approach the 2020 election.
Rather than engaging in such wasteful and frivolous expenditures, the Akufo Addo/Bawumia Economic Management Team must prioritise expenditure in order to protect the national purse.
The statistics show that Ghana’s current debt as a percentage of GDP is in excess of 60% with the IMF projecting end-of-year 2020 Debt to GDP at about 67% which will be unsustainable.
As the saying goes..” there is no free lunch …..”
John Abdulai Jinapor (MP)