The Bank of Ghana's lackluster performance has come under fire from the former Finance Minister Hon. Seth Terkper, who has raised concerns about a substantial loss of GHS60.8 billion as uncovered in the Bank of Ghana's 2022 Annual Report.
According to Terkper, the government, through the Ministry of Finance, is not sufficiently addressing the budget deficit, which in turn necessitates further borrowing.
"The danger of this is that the Bank of Ghana has resorted to printing money, and the government may continue to incur deficits to the point where the Bank of Ghana runs out of funds," he explained.
Speaking on Accra-based Joy News’ UPFront program, Mr. Terkper said though the Bank of Ghana provides deficit financing to the government, the bank’s law stipulates that it can only provide 5% of the revenue collected in the previous year to the government.
"This law seeks to avoid the crisis which we are witnessing today," he stated.
Regarding the issue of zero financing, Mr. Terkper mentioned that it was introduced in 2015 as part of the conditions set by the International Monetary Fund (IMF).
According to him, the IMF maintained that the Bank of Ghana should abstain from financing the government entirely. "This was to strengthen its balance sheet and promote its ability to work with banks in the financial sector," he stressed.
He added, "In 2016, the government under John Mahama refrained from taking new loans from the Bank to maintain zero financing, despite having an available 5% of BoG financing to meet the IMF's conditions."
Terkper concludes by stating, "The issue we face now is that the government continues to borrow from the Bank of Ghana to such an extent that even if we set aside domestic debt exchange, the government would struggle to repay its external creditors."