Accra: The Ranking Member on Parliament's Finance Committee, Isaac Adongo, has defended the government's decision to recapitalise the Bank of Ghana over a number of years, insisting that the move is necessary to restore the central bank's financial health despite concerns about potential future fiscal pressure.
According to Ghana Web, Adongo, speaking in an interview on Channel One TV's Point of View, noted that the current administration inherited a situation in which there was no clear programme to recapitalise the central bank. He argued that the previous government failed to address the issue before leaving office and criticised former Finance Minister Dr Mohammed Amin Adam for not establishing a roadmap to restore the bank's capital position.
Adongo stated, "Something has to be done to recapitalise the bank. The current government assumed office on the back of a government that left without a programme to recapitalise the bank. Mohammed Amin had no idea of recapitalising the bank when he was leaving, and he was comfortable to leave the bank without it being recapitalised."
He further explained that the current recapitalisation plan is backed by law and has received parliamentary approval, including support from members of the previous administration. He emphasized that the plan is being implemented with the central bank and Ministry of Finance in agreement on the necessity of a recovery roadmap.
"The central bank itself is aware that we cannot continue on this path forever. The central bank and the Minister of Finance are agreeable that there must be a roadmap to recapitalising the bank. And that will be done," Adongo said.
He also disclosed that Parliament has already approved legislation granting the Finance Minister a number of years to implement the recapitalisation programme. Adongo expressed confidence in the Minister's commitment to adhere to the legal framework established for this purpose.
Adongo argued that the current fiscal pressures facing the economy differ significantly from those experienced under the previous administration. He explained that past fiscal dominance was driven by external borrowing and monetary expansion, whereas current economic activity is largely supported by domestic productivity and internally generated resources.
He added that the present situation is preferable because inflationary pressures are being moderated by productive economic activity rather than excessive borrowing or monetary financing. However, Adongo cautioned that recapitalisation itself comes at a cost and warned that the government must ensure the burden does not eventually return to taxpayers through future fiscal pressures.