Governor of the Bank of Ghana, Dr. Abdul Nashir Issahaku has dismissed allegations that the Ministry of Finance contravened section (53) of the BoG Act 612 when it transferred 250 million dollars of the 1 billion dollar Eurobond proceeds to a private account.
According to the Governor, government took the cedi equivalent of the amount hence, cannot be in contravention of the BoG law.
The Running mate to the 2016 Flagbearer of the NPP, Dr. Mahamudu Bawumia last two week alleged that the Minister of Finance, Seth Tekper flouted the BoG Act when he transferred 250 million dollars belonging to the Ghana Infrastructure Investment Fund (GIIF) from the 1 billion dollar Eurobond it issued in 2015, into an account with the United Bank for Africa (UBA).
According to him, the country is also losing money as it is expected to repay the bank which had purchased treasury bills at an interest rate of more than 20 percent.
But speaking to journalists on the issue on Monday, Dr. Issahaku maintained that the Finance Ministry did not flout the rules, “I think from our stand point here, all government foreign exchange has to be in the custody of the Central Bank and when government need their money, they take the equivalent in cedis,” “The 250 million dollars that was taken out of here, they did not take foreign exchange dollars, the dollars was surrendered to the Central Bank, it was sold to the Central Bank and the government took the equivalent of that in cedis to deposit it elsewhere.
So by the Bank of Ghana act, we have been in compliance,” he explained. Meanwhile a financial analyst and CEO of Dalex Finance, Ken Thompson has questioned the basis for Bank of Ghana to release money to the Ministry to invest into a private account, “For me the argument that the money was sitting there idle is an indictment on the Bank of Ghana if it is true because the BoG has been the holder of the country’s money all the time, after all the BoG manages the country’s reserves and they are in billions are we saying those monies do not earn any interest?” he remarked.
Ken Thompson also dismissed arguments that the move by government would have ultimately helped in reducing the cost of borrowing in the country as it increased money supply in the system, “The only way that the government can reduce the cost of borrowing is to cut down on expenditure.
It is only because the government has a huge appetite for debts, that is what keeps the rate high. There is always money therefore if the government reduces its appetite for debts, the Treasury bill rates will come down,” he Ken Thompson further stated.