The Ministry of Finance has dismissed claims that the Government is contravening the Constitution of the land by failing to seek Parliamentary approval of the country’s three year loan deal with the International Monetary Fund (IMF) worth about US$918million.
“The IMF loan to the Bank of Ghana does not constitute Government borrowing within the ambit of Article 181 of the Constitution. The borrowing would, therefore, not require Parliamentary approval under Article 181,” Cassiel Ato Forson, a deputy Minister of Finance, argued in a statement released in Accra on Thursday.
On Tuesday, September 8, 2015, the New Patriotic Party (NPP) minority Caucus in parliament urged the IMF to in the interim suspend any further disbursement of its credit facility to Ghana until contractual agreements about the bailout programme receive parliamentary approval.
In their opinion, there are various contractual violations concerning the deal, especially, with regards to Article 181 (3) (4) and (6) of the Constitution which needed to be rectified by Parliament.
They called on the Speaker to recall members to enable them consider the various agreements involving the bailout programme.
But the Finance Ministry say the IMF loan to the Bank of Ghana is not part of Government’s debt and does not qualify to be a loan as defined in Article 181 (6) of the Constitution as claimed by the Minority.
Below is the full response of the Finance Ministry:
RESPONSE TO MINORITY IN PARLIAMENT’S STATEMENT ON THE IILEGALITY OF GHANA’S PROGRAMME WITH THE INTERNATIONAL MONETARY FUND (IMF)
Thursday, 10th September, 2015. 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.
- 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—moneys from the Consolidated Fund or any other public fund may be used for payment or repayment; or 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.” - 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)
By: Kasapafmonline.com/Ghana
