BoG starts zero financing of govt

The Governor of the Bank of Ghana (BoG), Dr Abdul-Nashiru Issahaku, last Thursday told the Public Accounts Committee (PAC) of Parliament that the central bank had stopped extending loans to the government.

He said the BoG started the zero financing of government this year.

Dr Issahaku was answering questions from the committee on queries raised in the 2012, 2013 and 2014 Auditor General's reports against the BoG.

Deputy Finance Minister

A Deputy Minister of Finance, Mr Cassiel Ato Forson, who was also before the PAC, confirmed that the government had stopped receiving loans from the central bank.

He said the government had signed a fiscal agency agreement with the BoG for zero financing, starting from this year. 

"The government is not enjoying any financing from the Bank of Ghana," he said.

The zero financing of government by the BoG is one of the conditionalities in the government’s programme with the International Monetary Fund (IMF).

Government borrowing 

The reports indicated that government borrowings were in excess of the limits imposed in the BoG Act.

For instance, they noted significant balances on drawing accounts operated by the government directly through other government institutions, leading to an increase in the net exposure to the government in excess of the ceiling that had been set by Section 30 (1-3) of the BoG Act.

They recommended that the central bank should initiate measures to ensure that the provisions of the BoG Act regarding loans and advances to government were complied with.

Subsidiaries

The reports noted that although the BoG had a controlling interest in the Central Securities Depository, the Ghana International Bank Plc and the Ghana Interbank Payment and Settlement Systems, none of these subsidiaries was made to prepare financial returns to the central bank, the holding company.

According to the reports, the BoG often relied on the balances obtained by the auditors in their statutory audit of the subsidiaries.

Dr Issahaku said the central bank now received financial returns regularly from its subsidiaries and so it was able to monitor performances.

Also, he said, audited financial statements were received in due time for incorporation into the consolidated financial statement of the BoG Group.