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The Minority in Parliament has hit back at the Finance Minister, Ken Ofori-Atta, for his rallying call of support for the Bank of Ghana and its Governor, Dr Ernest Yedu Addison.
In a write-up published last Thursday and titled ‘Standing Strong with the Bank of Ghana’, Mr Ofori-Atta vouched for the competence of the Governor, having worked with him in the past seven years.
“Governor Addison is a competent professional of quiet courage,” Mr Ofori-Atta wrote.
“In these nearly seven years, we have worked together to ensure: the inviolability of the banking system; the establishment of the Consolidated Bank of Ghana (CBG) and the Development Bank of Ghana; the raising of over $10 billion in the Eurobond market and AfriExim bank.
“He brought inflation down to single digits of 7.9% for the first time; and managed an impressive period of currency stability in our country including the implementation of the Gold-for-Oil programme.
“It is either simply the height of irony or a sad reflection of the state of public discourse in our country that this man, steps up in a period of unprecedented global economic meltdown and domestic economic crises, and he is being pilloried for his good work.”
But a hard-hitting response penned by Minority Leader Dr Cassiel Ato Forson, who is also a former Deputy Finance Minister, said the “day of reckoning” for the two is near.
“Finally, the Minority in Parliament wishes to remind Governor Addison and Mr. Ken Ofori-Atta that the day of reckoning is very near and they will be held accountable for their collective mess,” the response on Monday, September 18 concluded.
Find the full response below:
SHOULD CITIZENS STAND WITH THEBANK OF GHANA GOVERNOR WHO HAS AIDED THE GOVERNMENT’S ECONOMIC MANAGEMENT TEAM TO DESTROY LIVELIHOODS? THE POSITION OF THE MINORITY IN PARLIAMENT
In a recent statement intended to justify the gross incompetence and misgovernance of the leadership of the Bank of Ghana, the Minister of Finance, Ken Ofori-Atta sought to “speak for” the Bank of Ghana but ended up worsening the case of the central bank and deepening its credibility crisis. Ordinarily, the beguiled statement by the Minister should be disregarded entirely and treated with the contempt it deserves. However, there is the need to correct some of the key misconceptions peddled and to fact-check the assertions made by the Minister in the statement.
1.From the second paragraph, the Minister erroneously used nominal figures to argue that the Bank of Ghana had grown its assets phenomenally between 2016 and 2022. If the Minister describes a 2.4-foldincrease from GHS53 billion in 2016 to GHS125.97billion in 2022 as phenomenal, how would he describe the increase in Bank of Ghana’s assets by 8.2-foldduring the period of the NDC government (2009-2016)when the same assets grew from GHS6.45 billion as at end-2008 to GHS53 billion as at end-2016?
2.What is even worse is that the increase in assets between 2016 and 2022 were largely driven by the illegal monetary financing of government;in other words, illegal lending to government. This excessive printing and lending of money to government is the cause of the economic woes the country is currently facing(high inflation, volatility in the exchange rate, and high interest rates) as confirmed by the IMF and the World Bank.
3.In the third paragraph, the Minister again used nominal GDP figures to argue that the size of GDP had more than doubled in value from GHS219.6billion in 2016 to GHS610.2billion in 2022, without adjusting for the impact of inflation within the same period. The Minister must realize that nominal values will always rise, hence the right thing to do is to express these in real terms.
4.On the watch of this Minister, real GDP growth slowed between 2018 and 2020 and only
recovered slightly in 2021 due mainly to revenues fromthe three oil fields they inherited
as well as the massive covid-19 revenue inflows, and not due to any special expertise of
the Minister. Again, the Minister’s management of the economy worsened in 2022 and it
is projected to further deteriorate at the end of 2023 with growth projection of 1.5%.
5.Inthe same paragraph, the Minister also touted doubling revenuessince 2016, with total
revenuesincreasing from GHS32billionin 2016 to GHS96.7billionby 2022. Again,for the
comparison to be meaningful, these nominal figuresmust be expressed in real terms.At
best, these figures should be expressed as a ratio of GDP, or in other words movement of
therevenue-to-GDP ratio.Indeed,data from the Ministry of Finance shows that revenue
to-GDP on the watch of this Minister has not performed well as he claims.Even in 2015,
and with all the challenges faced by the economy then, revenue to GDP was 13.2%.
Given all the resources that this government has received, including twoadditional oil wells, government’s revenue to GDP is just about 12.1%.The fiscal deficit on his watch
actually increased inspite of the covid-19 revenue windfalls, hence his claim of
increasing revenuesover the period is inconsistent with what happened to government
expenditures.
6.In paragraph 6, the Minister spoke about resetting the financial architecture since 2017.
The question is what the cost of doing so has been, and whether the exercise coud not
have been handled more prudentlyand at a much lesser cost and with minimal
disruptions in the financial architecture.
7.In paragraph 7, the Minister took another wrong dive stating,“However, as many central
banks, including Bank of Ghana, moved away from pursuing quantitative targets of
monetary policy towards price targets, dominance of the central bank’s balance sheet as
the key metric has waned in many economies and in academic literature as wel”.This is
entirely incorrect, both in practice and in theory. The central bank’s balance sheet
remains critical in the implementation of monetarypolicy, hence liquidity management
is at the core of this function.
8.If the Minister had appreciated the workingsof monetary policy, he woud have known
that despite the move from monetary targetingto inflation targeting, iquidity
managementor the ability to control the central bank’s balance sheet remainsan
integral part of monetary policy implementation.
9.The Minister must also know that the use of price targets does not mean that monetary
aggregates no longer matter. They still do matter in monetary policy implementation and
therefore excessive centra bank financing still matters for monetary poicy.
10.In paragraph 8, the Minister simply re-echoed the Bank of Ghana’s earlier argument that
it was normal for a centra bank to operate with negative equity, and that its losses
recorded in 2022 would not affect its operational efficiency. These industrialised
countries cited in the paragraph did not underwrite any insolvency of their governments
which caused such losses. The pandemic and the Russia/Ukraine war rather provided
windfall revenues to the government of Ghana,and hence cannot be areason in the
case of Ghana.If the losses and the consequent slide into negative equity (projected to
be repeated in 2023) would not matter, why then is the IMF programmeasking for a
repair of the balance sheet of Bank of Ghana in the medium term?
11.In paragraph 12, theMinister made another flawed statement that,“Accordingly, as the
focus shifts from direct targets of money supply to interest rates as operational targets,
the framework for analysing central bank balance sheets has shifted, enabling central
banks to play more interventionist roles in the economy than before”. This is completely
and utterly wrong. No framework for analysing central bank balance sheet has shifted; it
remains same. The Minister is probably confusing the recent asset purchase practices in some central banks in the industrialised world, with fiscal dominance. These are not the
same at all.
12.The interventionist role played by those central banks was to lend to corporates in the
private sector in those countries directy through asset purchases, which was later
redeemed and hence the central bank’s balance sheet was restoredto good health. This
is totally different from what the Minister has done to Bank of Ghana’s balance sheet
through illegal money printing and lending to government. Indeed, this practice is at the
root of Ghana’s macroeconomic probems currently.
13.In paragraph 14, the Minister sought to rub salt into the injury of ordinary Ghanaians and
pensioners who out of patriotism invested into the future of our country inlonger dated
bonds. The book of Proverbs 22:22 states, “Don’t steal from the poor, because they are
poor. Don’t oppress the needy in the gate.” And yet this Minister continuesto tout a so
called success of government’s debt operations that commenced in 2022. With sleaze,
this Minister continues to quote the bible and does not realise that he and his Databank
owe a moral and spiritual duty to the people of Ghana to refund the commissions they
earned on those very bonds that he has restructured.
14.This is a ministerwho claimsto be faithful to the bible andsays that he is doing a
voluntary job as Minister.Yet hewould neverrespond to the call by Ghanaians to allow a
more competent person to take over the economic and financial affairs of the country, in
theface of his poor performance.
15.On the new Bank of Ghana building, the Minister must appreciate the opinion of
Ghanaians as represented by their parliamentarians, on the subject matter. The central
bank has made losses in three of the past six years; and is projected to declare a loss
again in 2023and possibly in 2024. It is therefore legitimate for citizens to seek
clarifications regarding value for money considerations in executing such a project and
whether current circumstances justify a project of that nature. The Minister should
rather welcome the call for an independent audit into the project and to ensure value for
money at the end of the day.
16.Towards the end ofhis statement,the Minister surprisinglyveered off from the defense
of Governor Addison and decided to call forgovernance reforms that he claims coud
strengthen the Bank of Ghana. He strangely suggests a plan to dislodge the time
honouredarrangement which makes the Governor of the Bank of Ghanathe Chair of the
Board,as is the casein over 99% of central banks. TheMinister must reaise that this is
preciselywhy Parliament’s oversight function is keyasprovided inBanks and Specialised
DepositTaking Act 2016 (Act 930).
17.The Governor is mandated to report to Parliament frequentlyand to yield to the latter’s
oversight function. Unfortunately, Governor Addison has not yielded as required, and thMinister perhaps does not require him to do so, because he himself is also often
deficient in the requirement.
18.The Minister must not seek to dismantle this carefully thought-through corporate
governance architecture at the central bank.There is a reason why this is so in almost all
countries in the world. Clearly,the current legal and corporate governance regime at the
Bank of Ghana is not the problem; Ken Ofori-Atta is the problem.
19.History will remember this Minister of Finance and the government’s Economic
Mismanagement Team headed by Alhaji Mahamudu Bawumia for taking Ghana to the
IMF in an ambulance.
20.The economy that the NDC’s John Mahama government bequeathed to the Akufo-Addo/
Bawumia regime was far better than what Ghana has today. This is because the NPP
inherited a public debt that was sustainable at 56% of GDP;theAkufo-Addo/Bawumia
governmenthasincreased public debtto 103% of GDP with very little to show. In
nominal terms, they inherited pubic debt of GHS 120 billion, which they have increased
to approximately GHS600 billion with very ittle to show.
21.Again, the NDC left behind a robust economy with very strongbuffers. The Mahama
government left behind the Sinking Fund, Stabilisation Fund, Ghana Infrastructure
Investment Bank (GIIF), Ghana EXIM Bank as well as a robust tax revenue and oil revenue
from three oil fieldswhich the NPP used to kickstart their administration. Yet they have
very little to show and have collapsed the economy on their watch.
22.Furthermore, the NDC put in place a strong tax policy and a prudent and controlled
expenditure regime, including the Government Integrated Financial Management
Systems (GIFMIS). Yet the NPP came in and processed expenditure outside the GIFMIS architecture.
23.It is also noteworthy that the NDC government did not short-change Ghanaians with a haircut economy. The NDC government had a credit rating of B+; the Akufo-Addo/Bawumia government’s management of the economy, with Ken Ofori-Atta as the Minister of Finance, is rated D, a super junky economy.Surprisingly, this government that boasted of not signing up to an IMF programme shamelessly did a Uturn and ended up with the worst form of an IMF programme; a programme that they announced and signed up at a time that they had collapsed the economy and Ghana’s economy was at the intensive care unit.
24.The Minister of Finance should not say anywhere again that the NDC administration left behind a derailed IMF programme. Clearly, at the time we were leaving office there was no monetary finance. For the first time in the history of Ghana, the government did not take money from the central bank even though the law allowed the then administration to take 5% of the previous year’s revenue from the central bank. But as a government that cared about the impact of inflation and how it could destroy the livelihoods of ordinary Ghanaians, we stayed away from borrowing from the central bank.
25.The people of Ghana would recall that because the Mahama administration left behind a robust economy, the Akufo-Addo/Bawumia government within the first three months of its assumption of office was able to borrow US$2.25 billion from Franklin Templeton.
Today, that same Franklin Templeton will not lend Ghana even one Dollar because the country is not credit worthy.
26.The Minister of Finance should carry his mess and his shame. He should not bring the NDC into matters that border on his greed, state capture for his family and friends as well as his monumental failure in pubic office. We did better than they are doing and the NDC will always do better when the good people of Ghana give John Mahama and our party the opportunity to govern from January, 2025.
27. Finally, the Minority in Parliament wishes to remind Governor Addison and Mr. Ken Ofori-Atta that the day of reckoning is very near and they will be held accountable for their collective mess.
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