We haven’t printed ¢22.04bn to support government’s budget – BoG
The Bank of Ghana has dismissed claims by the Minority in Parliament that it has printed of ¢22.04 billion to finance government budget.
In a statement to set the records straight, the Central Bank said the amount of ¢22.04 billion represents net claims on government, and not new currency printed to support the Government’s budget.
The net claims of ¢22.04 billion, it said, has the following four components.
They are Government of Ghana tocks and bonds sold by commercial banks to Bank of Ghana under repurchase agreements, by which banks routinely manage their liquidity positions; the International Monetary Fund SDR allocation disbursed to government through Bank of Ghana; Draw-down of government’s own deposits held with Bank of Ghana and negative balance on government’s account with Bank of Ghana at a point in time, and self-liquidated as new Government deposits credited to the account.
“First, there is an amount of ¢1.6 billion which reflects GoG Stocks and bonds sold by commercial banks to Bank of Ghana under repurchase agreements. These bonds, held by a commercial bank since 2021 were purchased by Bank of Ghana to provide liquidity to the bank, under a repurchase agreement that required the bank to buy back these bonds at a later date”.
“Having purchased these bonds on the secondary market as a secondary transaction, Bank of Ghana’s holdings of GoG bonds increased by ¢1.6 billion, not because it had lent money to Government, but because it had purchased a GoG bond originally purchased by the bank for investment purposes. As part of its function of providing liquidity to the banking sector, Bank of Ghana routinely enters into similar agreements (Repos and Reverse Repos) with commercial banks that hold Government bonds and require liquidity to meet short-term obligations. These arrangements do not represent lending to Government by Bank of Ghana”, it explained.
“The proceeds of bonds purchased from banks, go to those banks and not to Government. Once Bank of Ghana purchases such bonds from banks, it holds them until maturity of the bonds, unless they are repurchased by the banks”, it added.
More soon….
Source: Ghana News
