Speaking on Joy News’ PM Express Business Edition on January 2, he highlighted the bank’s track record over the last eight years, stressing that the institution has consistently operated independently despite external perceptions.

Responding to questions about the BoG’s autonomy, Dr Addison was unequivocal saying “I think the Bank of Ghana has operated very independently. The record speaks for itself.”

He pointed to several years of zero financing of government deficits as evidence of this independence.

“People do not believe that there was zero financing in 2017, zero financing in 2018, zero financing in 2019,” he emphasized.

“Now in 2020, you had COVID. The government went to Parliament and got approval to get GH¢10 billion from the central bank. In 2021, we were back to zero financing with a lot of effort from the central bank.”

Dr Addison explained that the pandemic-induced crisis in 2022 necessitated some intervention but stressed that such exceptions were not indicative of routine practices.

“Those who don’t believe that the bank is independent do not understand the issues,” he said.

On whether the BoG requires additional reforms to enhance its independence, Dr Addison was clear, “I don’t buy into that argument that the Bank of Ghana needs to be made more independent. I think the Bank of Ghana can operate effectively as is.”

Instead, he advocated for legislative reforms that would ensure government accountability when borrowing from the central bank.

“What I do buy is to put into place reforms in the Act which would ensure that when governments borrow, they pay,” he explained.

Dr Addison also addressed misconceptions about the BoG’s financial losses, particularly a reported GH¢60 billion loss.

He clarified that these losses were not accumulated in a single year but spanned decades of unpaid government debt.

“The GH¢60 billion was not borrowed in one year,” he said.

“These are borrowings that have come since PNDC days. You just have to break down that GH¢60 billion—how much of it was from 1970 to 1980? How much was it from 1980 to 1990? How much was from 1990 to 2000?”

To prevent such long-term accumulations, Dr. Addison suggested reforms to ensure that government borrowings are repaid within the same fiscal year.

“Once we are able to put into place reforms which force governments to pay back in the same year, then you will not accumulate debt over the number of years that it has been done over the last 20 or 25 years,” he said.

Dr Addison’s remarks underscore the BoG’s commitment to maintaining its independence while highlighting the need for systemic reforms to address legacy issues.

“The Bank of Ghana’s autonomy is not just a principle; it’s a record,” he said.

It demonstrates the successful execution of a cross-border transaction payment making use of digital credentials, the eCedi and an approved stablecoin from Singapore.

Mr. Kwame Oppong, the Director, Fintech And Innovation Office, BoG, while speaking at the launch of Completion Of Cross-Border Trade Using Digital Credentials, said the Central Bank in collaboration with MAS initiated Project DESFT in June 2023.

The first phase of the project saw the design and development of a trusted credential system that enables SMEs to transform key information.

These include basic credentials, licences, certificates, and trade records into verifiable digital credentials on a secure distributed ledger system, allowing potential trade partners and financial institutions to efficiently verify the authenticity of such information.

He said the live transactions demonstrated the feasibility of utilizing the proposed Ghanaian domestic retail CBDC platform, the eCedi in cross-border transactions.

“This affirms the potential of the eCedi system demonstrated for future interoperability with various cross-border credential and payment platforms,” he added.

He said the prospective introduction of the eCedi was poised to significantly enhance Ghana’s dynamic payment ecosystem, fostering inclusive growth and innovation while improving consumer experiences.

The Director said with its interoperability with the DESFT system, and verifiable credentials via UTC, the eCedi had the potential to facilitate the participation of Ghanaian Micro, Small, and Medium Enterprises in international trade cost-effectively.

Project DESFT is aimed at supporting SMEs in Africa to engage in international trade by removing significant obstacles they face, such as establishing trust with overseas trade partners and obtaining support in cross-border payments and supply chain finance.

“We believe that the new generation of financial technology offers innovative approaches to these challenges. After nearly a year and two phases of development, we have crafted a reliable information exchange solution founded on UTC standards and Semi-fungible Token technology,” he said.

He said the Bank had rigorously tested a cross-border payment solution built upon the principles of Purpose Bound Money (PBM) and conducted real trade experiments which fully align with our predetermined objectives.

The next phase of Project DESFT will continue to build upon the current achievements, focusing on highly automated digital credential processes, programmable payments across multiple digital currencies, and support for supply chain finance.

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The figures from the Central Bank indicated that the money supply remained virtually unchanged from January 2023 to September 2023.

According to the January 2024 Summary of Economic and Financial Data by the Bank of Ghana, the currency in circulation stood at the GH¢31.0 billion bracket between January 2024 and September 2023.

It stood at GH¢31.0 billion in January 2023 and February 2023 respectively. It however shot up marginally to GH¢31.2 billion in March 2023 and subsequently to GH¢31.3 billion in April 2023.

It dipped slightly to GH¢31.2 billion in June 2023 and GH¢31.1 billion in July 2023, but went up marginally in August 2023 (GH¢31.3 billion) and September 2023 (GH¢31.8 billion).

In October 2023, the growth of the money supply was GH¢33.3 billion. It then shot up to GH¢35.2 billion in November 2023 and GH¢37.6 billion in December 2023.

Demand deposits grew strongly in last quarter of 2023

Meanwhile, demand deposits, usually current and call accounts also grew strongly in the last quarter of 2023.

It stood at GH¢60.2 billion in January 2023, GH¢61.4 billion in February 2023, GH¢63.8 billion in March 2023, and GH¢66.2 billion in April 2023. It fell to GH¢64.9 billion in June 2023 but rose slightly to GH¢65.4 billion in July 2023.

In October 2023, the demand deposits stood at GH¢71.3 billion but went up to GH¢74.0 billion.

It subsequently surged to GH¢84.2 billion in December 2023.

The interest rates on demand deposits, however, remained flat at 2.63% in the first four months.

Growth of savings deposits strong in quarter 4, 2023

Similarly, the growth of savings deposits grew strongly in the final quarter of 2023.

It grew consecutively in the first quarter of 2023 and dipped slightly in April 2023. It stood at GH¢48.8 billion, GH¢51.3 billion, GH¢53.2 billion and GH¢53.0 billion in January 2023, February 2023, March 2023 and April 2023 respectively.

It remained virtually unchanged till October 2023 when it hit GH¢59.5 billion and then to GH¢61.3 billion in November 2023. It ended the year at GH¢63.6 billion (December 2023)

However, the interest rates on the savings products fell to 5.0% in June 2023 and remained the same from then onwards to December 2023. They were pegged at an average of 7.62% before June 2023.

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The IMF wants the two entities to sign a commitment to zero financing, said the people who asked not to be identified because they’re not authorized to speak publicly on the matter.

The accord is a condition Ghana is required to meet in order to secure final approval for a $3 billion IMF bailout, one of the people said.

An IMF spokesperson didn’t immediately respond to an email seeking comment. Spokespeople for the Ghanaian Finance Ministry and the central bank didn’t immediately respond to requests for comment.

The decision would bring a halt to central bank loans to the government that amount to about 40 billion cedis ($3.2 billion), according to one of the people.

Central-bank lending to Ghana’s government ballooned last year as investor concern about the state of the nation’s public finances depressed demand for its domestic bonds.

The central bank stepped in to provide funding for the budget and to roll over maturing loans.

An agreement would also bar state-owned enterprises such as the Ghana Cocoa Board, which owes about ¢7 billion, from using more central bank financing, according to the person.

The cocoa regulator — the sole buyer of cocoa from farmers in the world’s second-biggest producer of the chocolate ingredient — uses the funding to support growers.

Auction Undersubscribed

An auction of cocoa bills worth ¢940 million was “severely” undersubscribed last week, the central bank said after it declined to buy the instruments issued by the board.

The central bank used to step in when there were under-subscriptions, Steve Opata, who heads financial markets at the central bank, told Accra-based broadcaster Joy FM earlier this week.

“The bank decided to do things differently, so this shortfall was not financed by the central bank,” he said without giving further detail.

Ghana is overhauling an estimated 467 billion cedis of its loans. It’s been locked out of international capital markets since borrowing costs surged last year on investor concern about the state of Ghana’s public finances. 

The country secured a staff-level agreement for a $3 billion IMF bailout last year, but final approval by the IMF board requires the fulfilment of so-called “prior actions,” which haven’t been made public.

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It is also negotiating a restructuring plan for its local and external debt in a bid to show that it can make its loans more sustainable, another requirement to tap IMF funding. 

Ghana is targeting a reduction in its debt to 55% of gross domestic product by 2028, compared with an IMF estimate of 105% in 2022.

With the global pandemic already halving Ghana’s oil revenue projection, other key areas of the economy expected to be hit are exports, imports, foreign direct investments and foreign exchange receipts, thereby, culminating in a decline in the country’s economic activity.

The Bank of Ghana (BoG), per its assessment, forecasts a Gross Domestic Product (GDP) growth decline to 5.0 per cent from a 6.8 per cent growth projection in a baseline scenario, and a further decline to 2.5 per cent in a worst case scenario.

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But with so much ‘doom’ hovering around the nation’s economy, there is something businesses in the country can be happy about, which is the cut in monetary policy rate (benchmark interest rate) from 16 per cent to 14.5 per cent as well as the reduction in commercial bank’s Primary Reserve Requirement from 10 per cent to 8 per cent.

With the monetary policy rate now at 14.5 per cent, businesses in the country can now borrow more cheaply from banks to undertake activities.

Also with banks having to now keep just eight per cent of their total cash instead of 10 per cent with BoG, more funds will now be made available to businesses to operate with.  

The above short term measures implemented by the Central Bank form part of efforts to help stimulate economic activity and minimise the negative effects of COVID-19 on the economy.

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In the video, a woman in a Toyota Prado, who identified herself as a senior staff of the Central Bank, was caught neglecting road markings to get ahead of traffic towards the tunnel.  

Pensions Manager for the Social Security and National Insurance Trust, was also apprehended for using unauthorised number plates.  

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Another culprit was a military officer who initially sped off, but was pursued by police officers and brought back to the point of arrest.

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The exercise, known as War Against Indiscipline, is an initiative to fight against indiscipline on the part of drivers on the road.