A Senior Economist with the University of Ghana, Prof Godfred Bokpin has justified government’s decision to borrow some GH¢10 billion from the Central Bank to fund the fiscal gap resulting from the impact of the COVID-19 pandemic on the economy.
According to the professor, the government could not have made a better decision given the circumstances, implying that it is a step in the right direction.
Prof Bokpin counters claims by the Minority in Parliament to the effect that government by falling on the Bank of Ghana to fix the fiscal deficit has breached the Fiscal Responsibility Act.
The Finance Minister, Ken Ofori Atta on Thursday, May 28, 2020, in a report on the floor of the House indicated that tight financing conditions compelled the Akufo-Addo led government to turn to the Bank of Ghana (BoG), to trigger a GH₵10 billion loan facility in an initiative described as the COVID-19 Relief Bond Programme.
But not even the argument by the Minister that the emergency financing is consistent with the provisions of Section 30 of the central bank’s act, 2002(Act 612), could convince the Minority as they maintained forcefully that government had acted in convention with the law.
But rationalising the decision, Prof Bokpin suggested that the Fiscal Responsibility Law makes provision for exceptional circumstances such as the current situation occasioned by the pandemic.
“The fiscal responsibility Act understands that there are normal times and there are extraordinary times. So for instance, it will be unique this year to talk about the 5% threshold in terms of the fiscal deficit.”
“Then it means that perhaps you do not appreciate what is going on and the enormity of the problem we have right now. So all over the world what countries are doing is to do whatever it takes to contain the impact and limit the impact as far as possible,” he said.
“Because the point is that you can’t even talk about after COVID-19 if you don’t do what you have to do to get out of this and begin to talk about the next phase.”
“Because if you don’t do what it takes from the fiscal side and the monetary side, we can forget it. We can do the politics and we will get drowned in it,” he advanced.
According to the lecturer, there is the need to understand the state of the country now, adding that it serves nobody’s interest to belittle the impact of COVID-19.
“We are not more concerned about fiscal discipline than the USA.”
“We are not more concerned about debts sustainability than the IMF and the World Bank. In fact, we are not more concerned about debt sustainability than the Fiscal Responsibility Act,” he suggested.