BOG BLAMES FINANCE MINISTRY

The Governor of the Bank of Ghana, Dr. Kwabena Duffuor, yesterday denied that his office 'misreported' to the International Monetary Fund (IMF) that Ghana was not in arrears. Reacting to a claim by the former Deputy Minister of Finance, Mr. Victor Selormey, that it was the Governor of the Central Bank who informed the Fund that the country was current on its payment, Dr. Kwabena Duffuor described it as a "blatant lie."

He referred to a letter from the Fund dated January 3, which read: "As you may recall, prior to the IMF Executive Board meeting on August 21, 2001, Ghana had substantial arrears to the Paris Club and other creditors and the elimination of these arrears was made a prior action to Executive Board consideration of the second review under PRFG. Just prior to the August 21, 2001 Executive Board meeting, the Ministry of Finance (MOF) stated that "Ghana had become current on its external debt payments and there were no arrears."

In his reply to the Fund's letter the governor wrote to say: "Our investigation confirmed that Ghana was not current on its external debt obligation as at August 21, 2001." The Governor indicated that the Finance Ministry's report to the Fund was found to be mis-reporting and it was done "inadvertently."

The Governor then mentioned the weak coordination of information and communication among the three institutions responsible for debt management; Finance Ministry, Controller and Accountant General's Department (CAGD) and the Bank of Ghana. He attributed the erroneous report from the Finance Ministry from such lack of coordination of information. Consequently he said, the ministry was under the impression at the time that the government was current on its debt service payment.

Among the weaknesses were that sometimes demand notices came rather late creating situations when the Controller did not always instruct the Bank to make payment on time. The Governor stated: "It is clear that our debt management policy needs revamping and in this regard, we will be seeking technical assistance from the IMF and other relevant institutions later this year to formulate a coordianted debt management policy between the ministry, CAGD and BOG. As a short term, however, a number of corrective measures have been put in place to ensure that such a situation does not recur.

First, the debt management unit of MOF will not act on demand notices by donors but rather inform CAGD of all outstanding instalments due well ahead of time. In addition, CAGD will instruct BOG well ahead of time to effect payment, while the Bank will prepare a list of all outstanding payments and make them available to both MOF and CAGD on a weekly basis.

The Governor said he suggested that all three institutions should be linked electronically to facilitate direct access to all relevant information. "We would require technical assistance from the IMF in this regard," he stressed.

It is upon the request of technical assistance that a three-member team arrived in the country to study the prevailing systems which was confirmed by the IMF representative, Dr. G. Begashaw. He indicated that the team recommended that there should be effective communication among the three institutions. It would be recalled that Dr. Begashaw said the Fund was yet to decide on the issue of "misreporting" and the $38.5 million penalty. He also indicated that with little effort, the mistake could have been avoided.