Bank Of Ghana refuses to print 22.04 billion GHC | Bank and finance
The Bank of Ghana (BOG) has denied printing GHC 22.04 billion, saying the amount represents net claims on the government, not new currency printed to support the government budget.
In a statement reacting to allegations by the minority member of Parliament’s Finance Committee that the BOG had printed an amount of GHC 22.04 billion to fund the government budget without Parliament’s approval.
According to the Bank, net claims have a component of GoG stocks and bonds sold by commercial banks under repurchase agreements; IMF SDR allocation disbursed to government through Bank of Ghana; Drawdown on government’s own deposits and negative balance of government’s account with the Bank of Ghana at any given time.
In a statement released by the Central Bank, it explained that bonds, held by a commercial bank since 2021, had been purchased by the BoG to provide liquidity to the bank, under a repurchase agreement which required the bank to redeem these bonds at a later date.
“After purchasing these bonds on the secondary market in a secondary transaction, the Bank of Ghana’s GoG bond holdings increased by GHC 1.6 billion, not because it had lent money. money to the government, but because she bought a GoG bond originally bought by the bank for investment purposes,” he said.
She noted that she regularly entered into similar agreements (Repos and Reverse Repos) with commercial banks that held government bonds and needed cash to meet short-term obligations.
On the issue of IMF SDR resources to the government, the BoG noted that GHC6.2 reflected the on-lending of IMF SDR resources to the government, in line with the overall objective of the IMF SDR special operation.
He added that “however, in this particular case, the special allocation of SDRs by the IMF was designed to provide budgetary support to countries to help address issues related to the Covid-19 pandemic. Last year , the Bank of Ghana received an additional SDR allocation of SDR 707.3 million ($1.001 billion)”
He noted that IMF resources were generally intended for balance of payments support, which goes directly to central banks.
The Bank further disclosed that an amount of GHC 2.85 billion reflected a drawdown on the government’s own deposits held with the Bank of Ghana.
These, he explained, included statutory funds such as GET FUND, National Health Insurance, District Assembly Common Fund and Sinking Fund.
Also included are donor related funds as well as operational accounts of Ministries, Departments and Agencies (MDAs) with the Bank of Ghana.
The BoG also indicated that a residual amount of GHC 11.4 billion included in the GHC 22.04 billion, represented a debit balance on the main Treasury account held with the Bank of Ghana at the closing date. .
She said overdrafts of this nature occur from time to time because the auction system was designed to provide same-day settlement of maturities and interest payments once the auction is concluded.
“This guarantee of same-day settlement of maturities and interest payments, which has always been part of the auction system, has supported the development of the local currency bond market.
“With such a guarantee, on occasions where there have been uncovered auctions, maturities are automatically settled and then a reconciliation is done with the government. Incoming government cash deposits are then automatically used to liquidate these balances overdrafts on a continuous and continuous basis” the central bank explained.
He said the current gap of GHC 11.4 billion reflected the net amount of the gap at the end of June 2022.
This balance is cleared regularly. Any outstanding balance must be settled before the end of the year.
“The Bank of Ghana would like to assure the public that, in carrying out its functions as banker to the government, it is committed to complying fully with all relevant legal requirements,” the statement added.
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