The Bank of Ghana (BoG) has released a statement refuting claims that it has breached the Fiscal Responsibility Act.
The bank asserts that the act is still suspended and has yet to be reinstated by Parliament.
Fiscal Responsibility Act
In 2018, the Parliament of Ghana passed the Fiscal Responsibility Act, Act 982, which requires the government to maintain a fiscal balance with a deficit not exceeding five per cent of the Gross Domestic Product.
However, the 2022 budget showed that the central bank provided GH¢40 billion to tackle the deficit, leading to allegations of a breach of the law.
According to the statement from BoG, the act was suspended by Parliament during the peak of the COVID-19 pandemic in 2020 and remains suspended.
The central bank explains that its financing operations are part of the corrective measures designed to address the financing problem of the budget and were used as a crisis management tool.
“It must be recognized that the ongoing debt operations are part of the corrective measures designed to address the financing problem of the budget. Bank of Ghana financing was part of a crisis management tool used in dealing with the difficulties of 2022,” the statement reads.
Bank of Ghana Act
Even though the Bank of Ghana clarifies that the suspension of the Fiscal Responsibility Act is still in place and that it has not breached the law, there are some who are of the view that the issue here is not the Fiscal Responsibility Act but the Bank of Ghana Act which limits the bank's lending to government to 10% of the previous years GDP, and that this is where Dr Ernest Addison and his team need to be made to provide answers.