The Member of Parliament for Bolgatanga Central, Isaac Adongo, has accused the Governor of the Bank of Ghana, Dr Ernest Addison of falsifying Ghana’s Net International Reserves to mislead investors.
According to Mr Adongo, that act by the BoG is “unethical and unprofessional”.
Mr Adongo, in a letter addressed to Dr Addison, said: “It is very interesting to note that your July 2018 and May 2018 MPC Press Statements were very quiet on Ghana’s Net International Reserves position. Why was this so? Apparently, this was because Ghana’s net international reserves had been worsening since May 2018 when it recorded USD4.65 billion. By October 2018, BoG had drawn down about USD1.3 billion of the reserves in response to portfolio reversals and mounting pressure on the cedi.
Indeed, Ghana’s international reserves fell dangerously low to USD3.3 billion that could only cover 1.8 months of imports. As a result of this precarious NIR position, the country began to experience high levels of vulnerability. Government’s efforts at increasing borrowing to provide more forex faltered because investors were not interested in lending to Government unless interest rates were increased. In the process, the government’s borrowing, gap referred to as uncovered auction, increased to over GHC5 billion – USD1.04 billion, using an exchange rate of GH4.8 to USD1”.
“Sadly, BoG unethically and unprofessionally decided to falsify Ghana’s NIR to mislead investors and the markets by suddenly adding Ghana’s Petroleum Holding Funds to our net reserves. This was a serious misconduct that was clearly against the IMF’s Balance of Payments Manual 5 (BPM5) guidelines on the definition of NIR. The Petroleum Holding Funds are encumbered funds which are not available to BoG and cannot be added to its reserves. Therefore, by adding it to the NIR, it was equivalent to stealing someone’s money to add to yours to avoid being identified for your true level of poverty.”
Mr Adongo also accused the BoG of manipulating policy rate cuts and policy distortions.
Attached is Mr Adongo’s full statement:
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