Debt Exchange Programme Not a Threat to Central Bank's Autonomy - BoG Boss

Accra, Ghana - 03 Jan, 2025 - Dr. Ernest Addison, Governor of the Bank of Ghana, has moved to dispel concerns that the central bank's independence was compromised by its involvement in the government's debt exchange programme. Speaking on a local news programme, Dr. Addison described the programme as a necessary response to a severe national crisis, insisting that it had no bearing on the bank's autonomy.

Dr. Addison drew parallels with Sri Lanka's economic collapse, highlighting the crucial role played by the Bank of Ghana in preventing a similar catastrophe in Ghana. He noted that Ghana's central bank still had foreign exchange reserves, unlike Sri Lanka's, which had depleted its reserves.

The debt exchange programme, Dr. Addison explained, was part of a broader effort to stabilise Ghana's economy, in line with the International Monetary Fund's (IMF) framework. He rejected suggestions that the bank could have done more to mitigate the economic shocks, stating that the measures implemented were necessary to prevent a total economic breakdown.

“The debt exchange programme has nothing to do with the independence of the central bank,” Dr Addison stated unequivocally.

He described the programme as a “pure crisis issue,” stressing its urgency during a time when Ghana was on the brink of economic collapse.

“It was a life-and-death matter for all Ghanaians. At that point, nothing else mattered. Salaries were not going to be paid. There was going to be chaos because nobody was getting their investment returns,” he said.

“The IMF’s approach to the crisis was clear: the Bank of Ghana had to continue financing the government to maintain stability while we worked on the program,” he said.

“At that point, those holding government instruments were the ones impacted. What happened in October during the debt standstill could have happened much earlier in the year, but it would have been disorderly without the appropriate policies in place,” Dr Addison explained.

“This was the solution given the situation the country found itself in,” he said, adding that the measures implemented were necessary to stabilise the economy and prevent a total breakdown

“The recent economic challenges were about survival. Let’s not oversimplify the situation,” he concluded.

Source: Lead News Online