Governor of the Bank of Ghana (BoG), Dr. Ernest Yedu Addison, has highlighted the need for legislative reforms to address the longstanding issue of government borrowing from the central bank.

In an interview on Joy News’ PM Express Business Edition on January 2, he called for changes to the Bank of Ghana Act that would require governments to repay borrowed funds within the same fiscal year to avoid the accumulation of unpaid debts.

Dr Addison pushed back against criticisms questioning the Bank of Ghana’s independence, stating that the central bank had operated autonomously in recent years.

“I think the Bank of Ghana has operated very independently. The record speaks for itself,” he asserted.

He cited the Bank’s track record of zero financing for government budgets from 2017 through 2019, adding, “In 2020, COVID hit, and the government went to Parliament and got approval for GH¢10 billion from the central bank.

"But in 2021, we were back to zero financing, showing the central bank’s commitment to fiscal discipline.”

However, Dr Addison pointed out a persistent issue: unpaid government borrowings spanning decades.

“In the books of the Bank of Ghana, there are borrowings that go back as far as the PNDC era that have not been paid,” he revealed.

Dr Addison provided a breakdown of the problem, explaining that the perception of the central bank’s recent financial challenges was misleading.

“When you say the Bank of Ghana lost GH¢60 billion, it was not borrowed in one year. These are borrowings that have accumulated over the years—from the PNDC days through the 1980s, 1990s, and beyond,” he explained.

He argued that implementing reforms to mandate same-year repayment would prevent such long-term debt accumulation.

“Once we are able to put into place the reforms that force governments to pay back in the same year, you will not have this accumulation of debt over 20 to 25 years,” he stated.

Dr Addison dismissed the notion that the Bank of Ghana needed further measures to ensure its independence, stating, “Those who don’t believe the Bank is independent do not understand the issues. The BoG is operating effectively as it is.”

Instead, he advocated for reforms to enhance accountability and transparency in government borrowing.

“It’s not about making the central bank more independent; it’s about ensuring that governments adhere to repayment obligations,” he stated.

The governor’s remarks underscore the importance of fiscal responsibility and the need for legislative changes to address structural issues in Ghana’s financial system.

By requiring governments to repay borrowed funds promptly, such reforms could alleviate pressure on the central bank and prevent the accumulation of debt over decades.

“We need reforms that not only ensure fiscal discipline but also preserve the integrity of the financial system. It’s about making sure that the mistakes of the past are not repeated,” Dr Addison concluded.