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Open letter to the Minority Leader of the Parliament of Ghana on recent matters on Bank of Ghana - Fixing the Ghana Agenda

Feature Article Open letter to the Minority Leader of the Parliament of Ghana on recent matters on Bank of Ghana - Fixing the Ghana Agenda
THU, 31 AUG 2023 LISTEN

Dear Minority Leader of the Parliament of Ghana,

Firstly, my warmest greeting to you and let me use this opportunity to register my felicitation to you for your appointment as the leader of the great and nationalistic Minority group of the Parliament of Ghana. Sir though my congratulation is belated, it humbly elicits your acceptance since it is worth registering in the Fixing the Ghana Agenda.

Sir, relevant national issues on the front burner which among others include matters on Bank of Ghana especially on the financing of the gap in the budget of 2022, the impairment of GHC60billion from the balance sheet of the Bank of Ghana and lastly on matters concerning Bank of Ghana’s construction of the new Head Office allegedly at 121 Billion US Dollars, which is subject to review on the advice of the Consultants for the Construction and equipment.

Executive Summary
Sir, on the financing of the gap in the 2022 Budget, evidence obtained suggested that Bank of Ghana acted in accordance to her Constitutional and legal objectives of preventing the possible total collapse of the Economy of Ghana from the doldrums as occasioned by both internal and exogenous factors (the repercussions of the COVID-19 pandemic, aggravated by the Russia-Ukraine War) in order to navigate towards maintaining the stability of the Currency as stipulated in Section (2) (a) of Article 183 of the Constitution.

Mr Minority Leader, on matters on the financing of the gap in the budget of 2022 as occasioned by the mentioned predicaments as regarded as Force Majeure situations, these were coupled with the downgrading of the financial status or rate of Ghana by the International Financial Rating Agencies and thus deprived Ghana of her traditional way of robbing Peter to pay Paul in the International Capital Market for sourcing for funding/donor support and generating foreign exchange for the national budget to meet our penchant for the consumption of foreign goods.

The repercussion of these state of affairs, created a very serious budget financing gap in the 2022 Budget which was termed as the Citizen Budget. Sir, in order to halt the possible collapse of the Economy of Ghana, Bank of Ghana, as the Lender of Last Resort to both Commercial Banks and the Government of Ghana (which coincidentally is the Risk Owner or 100% Shareholder of Bank of Ghana) had to step in 2022 by invoking her Constitutional mandate to meet her objective of ensuring the navigation of the economy from the Doldrums as occasioned by the Force Majeure conditions towards and the final maintenance of macroeconomic and financial stability and inclusive growth.

Sir, on the impairment of 60 Billion Ghana Cedis through the Balance Sheet of Bank of Ghana was necessary in order to help in the reduction of the unsustainable nature of the accumulated national domestic debt from 105% to 55% as one of the conditions by the IMF before granting a bail out/ Credibility policy. Hence, the Bank of Ghana had no option, aside the active participation of Bank in the proclaimed Domestic Debt Exchange Program (DDEP) which was sine qua non (absolutely necessary) for a very early attainment of a principal conditionality of the IMF before granting the required bail out and financial credibility both essential for booting the economy of Ghana from the doldrums and navigating the economy of Ghana towards macroeconomic and financial stability and inclusive growth as required by the 1992 Constitution.

Lastly, another national matter, concerning Bank of Ghana, also on the front burner which you are fully aware of is the relocation and construction of new Headquarters of Bank of Ghana because the old one is not fit for purpose. Sir, the three issues as stated above seemed to be a threat to national cohesion and the social fabric of our dear Country and therefore begs for your critical thinking as one of our principal National Political Leaders

So, Sir, based on the above situations, I deem it as an urgent need for risk mitigation measures to help in the maintenance of stability of the Fourth Republic. So, as a very Senior ex-Military Officer with wide experiences in risk management, cultivated from both Military duties (for the records and for your consumption let me state that I am one of the very few Military Officers who fought in a fierce combat through counter attack to repel rebels of the then Warlord Charles Taylor from an attempt to capture the Spriggs Payne Airport in Monrovia and later on as an Infantry or Combat Company Commander of the Advance Party which captured the Robertsfield International Airport at Harbel in Margibi County from rebels of Charles Taylor. This was after a very fierce battle through a very frightful and difficult terrain (predominantly forest) in Liberia as well as in Peace Enforcement in Liberia. Among others, I was trained in Africa Crisis Response Initiative, Disaster Management etc. I also performed Police duties (as the last Provost Marshal of ECOMOG in Liberia), Lastly, I had enough working experience in the Large Scale Mining g Industry under the auspices of the Ghana Chamber of Mines especially in the Security Sector.

Sir, the mentioned backgrounds, have made me to appreciate very well the importance of peace, tranquility and stability in a democratic dispensation, so for these reasons , as one of the patriotic senior citizens of Ghana imbued with the said wide experiences made me to conduct risk assessments on the subjects on the front burner. So, I deem it as a sense of National duty to present to you my findings and recommended control measures for you, a key National Political Leader for your good and rightful judgment in order to help sustain the stability of the Fourth Republic.

Sir, you as a Member of Parliament especially one of the principal leaders of the Parliament of Ghana, consequently the upholding, preserving, defending and protection of the 1992 Constitution which anchors the Fourth Republic must be your utmost priority. Hence, you must not tolerate or trigger any act that may likely to precipitate the overthrow of the Fourth Republic, which casual effect include the dismissal of Public Policy Office holders of the Executive Arm of Government, especially in the Office of Government Machinery and the Ministries and likewise Members of the Legislature Arm of Government as such affects the elected Executive and the elected both the Majority and the Minority Caucuses of Parliament in a Democratic Dispensation. Hence, any act by any public policy office holder who like you, has also taken an oath to uphold, preserve, defend, and protect the 1992 Constitution in order to ensure the stability of the Fourth Republic of Ghana which logically implies the upholding, preserving, defending and protection of the 1992 Constitution must be your utmost prayers (obligations, observances, commitments, and yearnings). Hence, my humble appeal to you to tone down the rhetoric/your behavior and lead your followers for the attainment of national cohesion/stability.

Hon Minority Leader, as you aware every one of us is required to do whatever will achieve the greatest good for at least the greatest number of the population. So, we are told that a virtuous person, hence, you as one of our dear Honorable Members of the Parliament of Ghana, sees truly and judges rightly. So a study of situation you may come to the conclusion the Governor of Bank of Ghana and get two Deputies are our National heroes for very good job done for the Nation. Sir, I guess you might not have the sufficient time for the review and ponder on some of the pertinent national issues for your truly or good and rightful judgment. So, I deem it as nationalistic duty to provide you, as one of the key Political Leaders of my Country my findings and recommendations on the national issues on Bank of Ghana

Sir, the methodology used in the risk assessment involved review of Section (2) (a) of Article 183 of the 1992 Constitution, literatures on or releases from Bank of Ghana, the Bank of Ghana Act 2016 (Act 918), the Fiscal Responsibility Rules or Act 2018 (Act 982), review of the Declaration of the State of Emergency by the President of Ghana which was lifted in 28 May 2023 and literatures on risk management. So the scope covers (a) the provision of money to finance the 2022 Citizen budget of the Government of Ghana (b) Impairment of GHC60 Billion in 2022 (c). Justification of the construction of the New Headquarters building of the Bank, (d) Conclusion. (e) Recommendations.

The provision of money to finance the 2022 Citizen budget of Government of Ghana

Sir as you aware, national economy comprises two important Policies namely the Monetary Policy and the Fiscal Policy. Sir, for the records pardon me to info you that the core mandate of Central Banks globally including Bank of Ghana is on Monetary Policy and Central Banks are not profit oriented like Commercial Banks. The fiscal policy involves the government’s decision on the national budget on revenue and expenditure. The Monetary Policy was not hampered but the national budget was disturbed due to the repercussion of the COVID-19 pandemic aggravated by the Russia –Ukraine War which affected economies globally. The Fiscal Policy was further aggravated with the shutdown down of the international Capital Market to Ghana due to the down grading of Ghana by the International Credit Rating Agencies as result of the debacle with the E-levy which as you can recall it even caused a showdown between the Majority and the Minority Groups in Parliament. Fortunately, the Minority Group did a good job by getting the E-levy to be reduced from 1.75% to 1%.etc through a win-win solution.

So, Force Majeure was the scenario in 2022 , consequently, the relevant Law governing Fiscal Responsibility Rules is not and cannot be the aspect of the Bank of Ghana Act 2016 (Act 918) but the updated law enacted in 2018 by the members of Parliament of Ghana which is at Section 3 of the Fiscal Responsibility Act 2018 (Act 982), which grants the suspension of the Fiscal Responsibility Rules to the Minister of Finance as enacted by the Parliament of Ghana as sine qua non (essential condition) to address crisis situation confronting the Fiscal Policy. Thus logically or legally implies the lifting of the 5% limit of the previous fiscal year’s revenue set up in the Bank of Ghana Act 2016 (Act 918) since that section 3 on Fiscal Policy in the law in Act 982 has made the relevant section in Act 918 OF 2016 on the Fiscal Policy irrelevant because and Section 3 of the Fiscal Responsibility Act 2018 (Act 982) also passed in 2018 by Parliament has negated that aspect in Act 982 of 2016, since Section 3 of the Fiscal Responsibility Act 2018 (Act 982) is contingent on or during Force Majeure situation or period of declaration of State of Emergency by the President of Ghana.

So Sir, the Governor of Bank of Ghana after notifying the Finance Minister, whose outfit or Ministry is to benefit from the lifting of the 5% limit of the previous year’s revenue in order to raise funds to meet the gap in the Budget and report same to Parliament within 30 days as in the latest law of Act 982 of 2018 on the Fiscal Responsibility Rules which only required the Finance Minister to suspend the limit and authenticate and validate the suspension in Parliament within 30 days.

Sir, the law speaks on lifting of the 5% limit in times of crisis and Bank of Ghana as lender of last resort during crisis performed her Constitutional duty and also complied with the clear English Language version of the law at Section 3 of the Fiscal Responsibility Act 2018 (Act 982) which governs on Fiscal Rules and what must be done when a Force Majeure Situation is determined or obvious. Hence, Section 3 of the Fiscal Responsibility Act 2018 (Act 982) negates that aspect of the Fiscal Policy in the Bank of Ghana Act 2016 (Act 918).

Sir, I recommend you please do a critical thinking on the matter and see whether there is the need for a second look on the two affected laws and if so tweak the Act 982 of 2018 or amend Act 918 of 2016 to fine tune it. Hence, Parliament should see this as a very big lesson for the Hon Members of Parliament of Ghana to sit up and do a very good job when enacting laws. The Governor of Bank of Ghana to my good judgment never committed any error.. Blunder if any was committed by Parliament and or the Minister of Finance.

Sir to recapitulate , the Fiscal Responsibility Act 2018 (Act 982), authorizes the Minister for Finance to suspend the fiscal responsibility rules and seek authenticate the suspension from the Parliament of Ghana within 30 days only contingent on the following reasons (a). Force majeure, unforeseen economic circumstances or both including (a) Natural Disaster, Public health epidemics, drought or war where a state of emergency has been declared by the President under article 31 of the Constitution note the period under review was (b). An anticipated severe economic shock, including commodity price shock, (c) periods where the GDP growth rate is one percent or less. Hence a crisis situation happened in 2022 and was determined by the Minister that the Government of Ghana has suffered the inability to raise enough revenue for the national budget for 2022, this situation threatened National Security, so, the Bank of Ghana as the Lender of Last Resort came to the aid of the Government of Ghana in order to prevent the collapse of the economy , hence an act to protect the Fourth Republic hence a price for Public good which must be commended by every peace loving persons especially Hon Members of Parliament.

So, Sir Mr Minority Leader of the Parliament of Ghana, the Governing Board and the Management of Bank of Ghana in 2022 haven sensed a looming disaster that could possibly destabilize the Fourth Republic of Ghana had to employ a risk management tool and provided reasonable funds to the Government or owner of the Bank. This made it possible to close the financial gap in the 2022 Budget occasioned by the Force Majeure situation in order to buy the price of public good in order to ensure no shutdown of Government thus ensured you and other were paid your salaries on time, needed logistics were met, interest on loans were paid etc. Hence for Public good that contributed greatly to ensure the stability of the Fourth Republic by not granting an excuse for possible Military takeover as experienced with the few amenities Coup in 1972 and the 31 December 1981 Coup.

Sir, you need to read Ecclesiastes 1.9 which decree that whatever has happened before may happen again, so from Ecclesiastes 1.9, Ghana like Niger or Gabon is a possible Candidate for a Coup if we act wrongly and thus provide good chance for a Military Officer or Personnel to think of staging a Coup. So my take to you.

So, Sir in summary when Ghana’s economy reflected serious crisis in 2022, the Bank of Ghana acted properly when the Minister of Finance invoked the Force Majeure Clause and went to Parliament and caused the Suspension of the Fiscal Responsibility Act 2018 (Act 982) and thus justified the release of GHC37.9 Billion to the Government of Ghana. Sir I hereby suggest that you recommend the Governor of Bank of Ghana and his two Deputies to the President of Ghana for National Awards, they deserve the Honor of the Volta.

Impairment of GHC60Billion in 2022 from Bank of Ghana’s Balance Sheet

Sir, Ex-President Mahama, some Intelligentsias, some CSOs and you the members of the Minority Group in particular were the initial parties which recommended that Ghana should opt for the Debt Suspension in 2021 and later on in early 2022, the mentioned parties recommended that Ghana should opt for a bail out from the IMF which was not heeded to because we were/are very proud people, hmm not very stupid people who cannot managed the abundant resources given by God. Thanks to God our President wise up in July 2022, hence the President of Ghana bought this laudable recommendation from the Minority Group of the Parliament of Ghana with you as a member and this was at a time the debt of Ghana was over 105 %, hence unsustainable and this situation could not qualify Ghana for the Bail Out from IMF as recommended by you and your team as very patriotic citizens to ensure the macroeconomic and financial stability and inclusive growth and this your excellent recommendation was/is in line the Main or Core Objective of a Central Bank in our case Bank of Ghana as stipulated in Section (2) (a) of Article 183 of the 1992 Constitution to ensure the stability of the currency of Ghana etc.

Mr Minority Leader, we were all made aware in the later part of 2022 that a Domestic Debt Exchange Program was an essential risk management tool to reduce the Ghana’s debt accumulated since 1980s which was around 105% in 2022 to a sustainable level reportedly as around 55%, so we all got to know the conundrum confronted this program.

Sir, we found among others in the history of Ghana, the involvement of a former Chief Justice of Ghana who joined pensioners and picketed at the Ministry of Finance with some aged pensioners who kicked against the financial haircut of their investments. So for the attainment of the Bank of Ghana’s core objective of macroeconomic and financial stability and soaring of her foreign reserves and for a price for public good, the Governing Board and Management of Bank of Ghana upon realizing that it will be foolhardy in the name of what some school of thought wish as a Constitutional Independent Body and or due to the competencies of the Governor and his able and loyal or supportive Deputies they should sat down aloof and allowed the economy to collapse or they should have delayed the process for the attainment of the Bank of Ghana’s core objective of macroeconomic and financial stability and inclusive growth through the support of the IMF. A support that was contingent on a drastic reduction of the accumulated national debt since 1980s (the period of the Structural Adjustment Program/ Economy Recovery Program) which was reportedly around 1o5% to 55%. These persons failed to understand the matters of Security and safety supersedes everything.

So Bank of Ghana had to step in with 48.4 Billion Ghana Cedis from her Balance Sheet of GHC60Billion to bail out Ghana by paying a price for Public Good. Hence, National Security excellent act to protect the Fourth Republic. Hence, the upholding, preserving, defending and protecting of the 1992 Constitution, your utmost priority as Hon MP by not creating excuses or lucrative opportunity for any Military Officer or Military personnel to stage a Coup.

Sir, we are also aware that COCOBOD since her inception has been running at huge losses and only depends on a ritual Cocoa syndicated loan, in a yearly robbing Peter to Paul syndrome in our Voodoo Economy and we are aware that Bank of Ghana is a major partly beneficial of the external loans. Hence, it was proper or logical that Bank of Ghana, which is the State of Ghana’s Bank which is a beneficial of the external loans to boost the Country’s foreign reserves must take on board the debt of GHC4.7 Billion as COCOBOD unpaid loans, this therefore form part of the impaired GHC60Billion of the Balance Sheet of Bank of Ghana which has become the bone of contention in the public domain.

Sir, furthermore, it was found that Bank of Ghana inadvertently incurred a total loss of GHC6.9 Billion from her Balance Sheet due to price and exchange rate volatility or movement which was GHC5.2 Billion and other reasons amounting GHC1.7Billion etc-.

Sir as Hon Member of Parliament hence a virtuous persons who sees truly and judges rightly, it is expected that you would therefore accept that the impairment of the GHC60Billion from the Balance sheet of Bank of Ghana was a price for Public Good especially for the protection of the Fourth Republic and a price for the attainment of Bank of Ghana’s Constitutional core objective of stability of the currency through macroeconomic and financial stability and inclusive growth thus upholding the 1992 Constitution.

Mr Hon Minority Leader, as a former Director of Bank of Ghana, hence a virtuous persons you will agree with me that during crisis time, the Central Bank, hence Bank of Ghana should be judged by actions for the fulfilment of her Constitutional mandate and legal objective of maintaining macroeconomic and financial stability and inclusive growth. An act for public good, thus not for profit motive which is not even the objective of Central Banks, globally.

So, sir losses by a Central Bank especially in crisis management is permissible therefore not news, hence this should not cause you the Minority Leader of Parliament, hence a very fair minded person to fail or refuse to conduct logical thinking on the related matters and come out with good judgment and not to be moved by your emotions or public sentiments and join the man on the street to run amok on the mere hearing of the impairment of GHC60Billion from the balance sheet of the Central Bank.

Sir as a principal National Political Leader who must uphold the tenets of the 1992 Constitution and the laws enacted by Parliament and thus set examples for the Citizenries to emulate therefore should be seen recommending to anyone who has a case against the Governor of Bank of Ghana or any other person to invoke the powers of the Judiciary through the Court of Competent Jurisdiction and not in the Court of the man on the street or the Media. Members of Parliament must see to the growth of Democracy hence our Constitutions since the judgment of Competent Courts are also a form of enactment of laws.

Justification of the construction of the New Headquarters building of the Bank

Sir, according to the Governor of the Bank, in order to ensure the safety and security operations of Central Bank, the relocation of the Head Office of the Central Bank has been on the drawing board for over a decade or so. The need for relocation of Head Office of the Central Bank of Ghana reportedly for the following reasons of (a) fear of the current HQ in an alleged earthquake zone, thus it is not fit for purpose due to structural integrity matters. (b). Furthermore, the current need for enough space to meet a modern requirements of a Central Bank, hence the Bank of Ghana for enough space for various units including well secured vault for cash, accommodation of digital or cyber security systems etc, (c), As well as the to meet the Banks strategic objective of affording Ghana, the lucrative status as the Financial hub of the sub-region with the hope of becoming the potential Headquarter for a future Regional Central Bank (d) Likewise afford spaces for the Head Offices of some International Agencies like the West Africa Monetary Institute (WAMI) etc. Hence it is going to be a very cost effective project.

According to the Governor of the Bank, the Governing Board and the Management of the Bank decided to walk the talk in 2019 when the Bank made some profit of GHC1.6Billion in 2019 and through the Government, a land which initially belonged to SIC at Ridge area was secured and paid for the construction of the new HQ,.

So the construction started in 2019 with the hope of using subsequent profits of the Bank for the construction of the New Headquarters building. Info from the Bank revealed that that the Bank made further profits of GHC1.5Billion in 2020 and GHC1.4Billion in 2021. So it is the profit of the Bank which was/is being used for the building and acquisition of the essentials of the Bank. The Construction of the Project is reported to have a dedicated fund and it is about 42% complete. Hence, I recommend you support the construction of the project but ensure value for money.

Best Regards Sir.

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