The Government of Ghana has stated that the demand by the Minority group in parliament for the IMF deal to placed before the legislature is misinformed.
According to government, the three year extended credit agreement worth 918 million dollars is between the Bank of Ghana and the IMF and does not require parliamentary approval, citing the act establishing the central bank.
Read full release signed by Deputy Minister for Finance Ato Cassiel Forson
RESPONSE TO MINORITY IN PARLIAMENT’S STATEMENT ON THE IILEGALITY OF GHANA’S PROGRAMME WITH THE INTERNATIONAL MONETARY FUND (IMF)
The Ministry of Finance’s attention has been drawn to issues raised by the Minority in Parliament about Ghana’s three-year Extended Credit Facility (ECF) Programme (2015-2017) with the International Monetary Fund (IMF).
2. According to a publication in the Wednesday, 9th September, 2015, edition of the Daily Graphic, the Minority in Parliament has accused Government of violating the 1992 Constitution by failing to seek parliamentary approval for the three-year ECF arrangement between the Government and the IMF.
3. The Ministry of Finance disagrees with the Minority’s views on the matter because the IMF loan in question, which is approved by the IMF’s Board based on a Letter of Intent signed by the Minister for Finance and the Governor of the Bank of Ghana (the “Bank”) is disbursed directly to the Bank by the IMF, as balance of payments support, and is used accordingly by the Bank, without supervision or interference by the Minister for Finance or any other governmental authority.
4. The Minister signs the Letter of Intent together with the Governor of the Bank of Ghana because some of the policies underpinning the IMF Programme are policies to be implemented by Government.
5. The IMF loan to the Bank of Ghana does not constitute Government borrowing within the ambit of Art. 181 of the Constitution. The borrowing would, therefore, not require Parliamentary approval under Art. 181.
Art. 181(3) of the Constitution provides: “No loan shall be raised by the Government on behalf of itself or any other public institution or authority otherwise than by or under the authority of an Act of Parliament.
6. The Act of Parliament that is relevant to Government borrowing and lending is the Loans Act, 1975 (Act 335). The Act of Parliament that is relevant to the Bank of Ghana’s operations is the Bank of Ghana Act, 2002 (Act 612), Section 51 of which clearly permits the Bank to borrow, even in some cases, without the prior approval of the Minister for Finance.
7. It is worth noting that the IMF loan to the Bank of Ghana is not part of Government debt and the current Government debt levels exclude loans taken from the IMF. The IMF loan will not be serviced out of the Consolidated Fund or any other public fund, and therefore does not qualify to be a loan as defined in Art. 181 (6) of the Constitution, which defines a loan as follows:
(6) “For the purposes of this article, “loan” includes any moneys lent or given to or by the Government on condition of return or repayment, and any other form of borrowing or lending in respect of which—
a. moneys from the Consolidated Fund or any other public fund may be used for payment or repayment; or
b. moneys from any fund by whatever name called, established for the purposes of payment or repayment whether directly or indirectly, may be used for payment or repayment.”
8. Government is defined in Act 612, as: the “Government of Ghana”; and in Art. 295 of the Constitution as: “any authority by which the executive authority of Ghana is duly exercised”.
9. The executive authority of Ghana is not exercised through the Bank of Ghana. The Bank does not therefore qualify as “Government”. Further Clause 3(1) of Act 612 clearly states that in the performance of its functions, the Bank of Ghana shall be “independent of instruction from the Government or any other authority”.
10. Among the Bank’s functions enumerated in Section 4 of the Bank of Ghana Act, 2002 (Act 612) is to institute measures likely to impact favorably on the balance of payments.
11. We hope the information provided in this press release will allay any doubts in the minds of the public and put to rest the allegations about the illegality of disbursements of the IMF loan to the Bank of Ghana. END
HON CASSIEL ATO FORSON (MP)
DEPUTY MINISTER (F)
As a general rule we do not comment on domestic legislative processes. In a similar vein, it is a matter of domestic law as to whether an IMF arrangement requires parliamentary approval, and we defer to the member authorities to make this determination.
· The Ghanaian authorities issued a press release today (September 10) confirming that, under Ghanaian law, no such parliamentary approval is required. The government statement indicated that the ECF loan is disbursed directly to the Bank of Ghana (BoG) as balance of payments support and is used accordingly by the BoG, without supervision or interference by the Minister of Finance or any other governmental authority. It therefore does not constitute government borrowing and would not require parliamentary approval.
· Let me also remind you that as a member of the IMF Ghana requested for a program that was then approved by the IMF Executive Board in April 2015. This approval and the related disbursements since then have been done in accordance with the Fund’s own rules, including the emphasis on a member’s commitment to implement the program. Ghana’s three-year ECF-supported program is anchored on the country’s very own Shared Growth and Development Agenda.
