Member of Parliament for the South Tongu constituency, Kobena Mensah Woyome has proposed the decoupling of debt management function from the Ministry of Finance to an independent manager to ensure efficiency and prevention of debt pile ups.
He indicated that, it seems government instead of borrowing to fund projects and to pay back the loans with interests, it borrows rather for recurrent expenditure and other activities that does not guarantee the country’s ability to repay due to lack of openness on the part of managers of the debt describing it as recklessness.
According to him, the proposed independent debt manager of the country’s debt will advise government on loan acquisition decisions including how to borrow, what to borrow and at what rate and how to spend borrowings, ensure efficiency so that the country does find itself into huge debt situation in future.
‘’…I will actually suggest that government should be candid and maybe all here in this house must agree and advocate that, the managers of the economy, infact, there should be independent mangers of the debt of this country, so that that would be taken away from the responsibility of the finance minister, so that at least, .., they will be able to help advice government on decision with regards to what to borrow, rate at which to borrow, how to spend, and on what so that at least all these things can be manage efficiently, so that we don’t find ourselves in the situation we find ourselves” he proposed.
Mr Woyome who is also the Ranking Member on the Sports, Youth and Culture committee made the proposal on the floor of parliament when he took his turn in support of a motion to thank President Akuffo-Addo for delivering a message of the State of the Nation in accordance with article 67 of the 1992 constitution.
The North Tongu lawmaker also questioned the Bank of Ghana for failing on its policy rate management function which has led to the high inflationary rates the country is witnessing in recent times.
He criticized the central bank and described it as ‘reckless’ and engaging in an ‘illegality’ by dolling out of printed money to government beyond the allowable five percent threshold which has brought the country to its current status.
Mr Woyome backed his claim with fact and figures and explained that the central bank is expected to use its policy rate to control inflation by mobbing excess liquidity from the system but ends up using the backdoor in releasing more money to government to spend thereby defeating the purpose of the policy rate announcements.
“Whenever the Policy Committee meets and increase interest rates, with a clear intention of mopping excess liquidity from the system, so that, off course, we don’t have too much money circulating, and that is done usually through high interest rates, and off course that has its own attendant as a results of squeezing businesses in a way that they would not have access to funds to operate with. But all geared towards managing inflation and that is good. But at the same time, the same Bank of Ghana gives out money or funds government through the printing of money, and sometimes and almost all the time since 2020, beyond the 5% threshold that they ought to be doing, which is an illegality that has brought us where we are.
And the issue is this, what are they trying to achieve. You are trying to use the monetary policy to mop excess liquidity from the system because you want to control inflation, but at the same time using the back door and releasing more money illegally to the government, which is going to carry on more expenditure, by way of introducing more money into the system, defeating the very purpose of the monetary policy that was actually announced” Mr Woyome asserted.
The Ranking Member therefore urged the need for parliament to keep a carefully watch over the central bank because it has not been sincere.
..and so Mr Speaker if you watch carefully, figures such as in 2020, they (referring to BoG) funded government to the tune of Ghc10 billion, that is beyond the five percent threshold that ought to be allowed which is five percent of the previous year’s revenue that was collected, in 2021, they spent or printed in excess of Ghc 35 billion in terms of funding for government ,then at the same time in 2022, Ghc 50 billion was used to fund government, and then also in this year, so far, about Ghc40 billion, and you look at all these, you are funding government illegally, but at the same time announcing policy rate which is intended to be controlling the money circulation in the system.
So you are actually giving and then taking and then making life difficult for a lot people, operators in the economy, businesses alike and so on, in the Ghanaian economy.
Mr Speaker, that is one area that I think the action and inaction of the Bank of Ghana ought to be looked at and watch because they’ve never been sincere, and what how do you describe it? It is not reckless in terms of decision, it is not in a way not mismanagement of monetary policy in term of ensuring that you are controlling the macroeconomic indicators in the system, and that is for me a way of probably lieing for want of a better word, that you are intending to be controlling the monetary system but at the same time pumping more money illegally, into the system, but at the end of the day, you have achieve nothing, only to make life difficult for everybody including businesses and other operators in the economy” Mr Woyome stated.
He urged the president to allow independent state institutions mandated to investigate allegations of wrongdoing against his appointees with regards COVID-19 funds to do their works and establish the facts whiles urging him to desist from praising himself and clearing them of wrongdoings.