The Bank of Ghana (BoG) has disclosed that its numerous intervention during the outbreak of the COVID-19 pandemic did not only provide economic stability but also enhanced social protection to the vulnerable.
The Bank of Ghana, for example provided an amount of ¢10 million to the National Covid-19 Fund as seed-money, which enabled the Fund meet some critical health and social needs of those impacted by the pandemic.
In addition, the Bank, in partnership with the private sector, provided ¢10 million grant (in line with the Bank’s corporate social responsibility), to fast track the construction of the Infectious Disease Centre at the Ga East Government Hospital, which became the nerve centre for managing the Covid-19 pandemic.
All these measures, according to the central bank were taken outside of its core monetary policy duties to support the social infrastructure of the country to provide some relief for the public.
The good deeds of the Bank of Ghana were made public during the 2023 National Honours and Awards in Accra, where President Akufo-Addo awarded the bank for its contribution in fighting the COVID-19 pandemic.
Aside all the social measures taken, the bank also triggered its emergency support clause under Section 30 of the Bank of Ghana Act, 2002, Act 612, as amended, by purchasing a GH¢10 billion covid-19 bond to support the government’s Covid-19 policy responses.
Recent issues on BoG support
Recently, however, Bank of Ghana has taken notice of public discussions on its role in helping resolve the current economic crisis, which raises concerns about their understanding and workings of monetary policy doctrines.
Since 2020, Central Banks all over the world have witnessed significant changes in the conduct of monetary policy due to the persistence of enormous shocks to the global economy.
The spill over effects of these shocks were severe and costly, but have tendered to be grossly underestimated in the narrative of current economic developments in Ghana.
Whilst it is the case that the key function of monetary policy is price stability and maintaining the value of money, periods of crisis management, such as the Covid-19 pandemic, have come with dynamic and pragmatic policy response functions by central banks globally.
In the face of the unprecedented pandemic shock, Central banks were placed at the forefront and acted in concert with fiscal authorities to take swift and forceful actions to preserve human lives.
Changing roles of central banks
In recognition of timely responses to the crisis, Central banks formed a critical line of defence, with critical policies to prevent market dysfunction and acted prudently in their capacity as lenders of last resort.
Not only did most central banks cut interest rates, they also injected large amounts of liquidity to ensure financial stability amid an economic and health crisis.
Different tools were deployed to achieve objectives during the crisis – short term instruments, lending to financial institutions, outright purchases of government bonds, and regulatory and supervisory actions on the financial institutions.
For Bank of Ghana, the lessons learnt from the Covid-19 policy responses provided the blueprint in 2022 when the Government lost access to the capital market and financing critical government spending became a challenge.
This second crisis was again managed prudently with central bank support to prevent disorderly defaults in debt service payments and help government machinery from grinding to a halt.
This was done alongside working with the International Monetary Fund to craft a programme to resolve the economic crisis that faced the country.
Under such circumstances, all Central Banks would have reprioritised their objectives for the ultimate good of society.
As a Central Bank, we have always acted in good faith to the benefit of Ghana, and we are confident that the economy will return to the path of stability and stronger growth sooner rather than later.
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