Members of the Minority in Parliament say they will resist Finance Minister, Ken Ofori-Atta’s attempt to sign a Memorandum of Understanding (MoU) with the Bank of Ghana for zero financing for government.
The Tamale South MP former Minority Leader, Haruna Iddrisu described the MoU between the Bank of Ghana and the Ministry of Finance as “laughable” for the country.
“A serious country must be run seriously and run guided by a legal framework that protects the State and protects its institution. The Bank of Ghana is in breach for having to overdraft and lend government beyond the stipulated legislation within the amended Bank of Ghana Act.
“But MoU, what is the weight of MoU within the parameters of the Ghanaian constitution and Ghanaian law?” he questioned.
Speaking with Joy News’ Elton Brobbey, the legislator said the Finance Minister must be present before Parliament for legislation on zero per cent financing of government by the Bank of Ghana.
As a result, he noted that anything short of legislation passed by parliament will not be accepted.
The International Monetary Fund is, among other things, demanding that government enters into a binding agreement with the Bank of Ghana for zero financing of government programmes.
The bank is said to have provided over GH₵40 billion in support to government in 2021 and according to the central bank, the funding saved the economy from collapse.
Finance Minister, Ken Ofori-Atta on the sidelines of the IMF/World Bank meetings told JoyNews that government has signed a Memorandum of Understanding (MoU) in compliance with the IMF order.
Meanwhile, the Ghana Association of Banks says its members will henceforth grant loans to only productive projects as it defends its decision to participate in the domestic debt exchange programme.
This is despite the participation resulting in severe impairment of the assets of the institutions with some nearing insolvency.
CEO of the Association, John Awuah says participation was necessitated by a desire to save the economy from collapsing.
..we took a stage or we took a position that as a financial system certainty or some form of stability was extremely important. Are we going to sacrifice stability on the altar of pushing and pushing to get what?
“And if you get to that level where you’ve pushed the date from September to January to February to March to April, and the economy is tanking, you operate within the economy. Your certainty results in significant disruption in the economic performance, of course, then you’ll be holding instruments that you call bonds but will be more or less worthless. That is why we took the position as an industry that we want to be part of the solution,” he explained.
He however admits this situation means banks will have to be careful in granting loans to customers.