The Minority in Ghana’s Parliament is accusing the incumbent government headed by President Akufo Addo of scheming to make undue profit from the Central Bank’s issuance of the two new higher-denomination of the Ghana cedi notes of GHc 100 and GHc 200 to fund their party campaigns in the upcoming 2020 general election.
According to the Minority, there is no justification whatsoever for the Central Bank of Ghana to embark on such an exercise at this time when the same Central bank is pursuing a policy to drive down inflation by mopping up excess liquidity by using short-term Bank bills.
“Why would the Bank of Ghana claim to be striving to control inflation at great cost by mopping up excess liquidity using short term Bank bills, and then engage in an action that will cause massive inflation?” They quizzed.
The Bank of Ghana on Friday, November 29, 2019 announced the issuance of the two new higher-denomination notes and a GHc 2 coin which replaces the withdrawn 2-cedis notes already in circulation.
The Governor of the Central Bank, Dr. Ernest Addison, offering reasons for the exercise indicated among others that the new notes ” will complement the existing series to ensure customer convenience and bring about efficiency in the printing of currency to generate savings for the country.”
He also argued that ” these new higher value denominations will restore the dollar value of the higher denomination to about US$40, …high enough to significantly reduce the deadweight burden and high transaction cost in making high- value purchases in a cash- based economy like Ghana.”
However, addressing a press conference in Parliament on Wednesday, the Minority Leader, Haruna Iddrisu, indicated that the explanation by the Governor of the Bank of Ghana for the introduction of the new higher-denominations were unsatisfactory.
“There is absolutely no economic justification for the Central Bank’s decision. The Central Bank’s own economic and financial data reveals that current money growth is not below optimal rate. The latest data from the Bank of Ghana as at the end of October 2019 sugests that reserve money growth was 26.1 percent as compared to 4.3 percent in the same period last year,” he said.
According to the Minority Leader, the action taken by the Central Bank is only to raise seigniorage revenue. He therefore demanded for further and better particulars concerning the cost of printing the new notes and the cost for upgrading the old currencies already in circulation in May this year.
“What the Central Bank is doing is simply an exercise to raise seigniorage revenue. By seigniorage revenue, the Central Bank is going to make profit from difference between the face value of the new currency and cost of printing each currency. For instance, if it will cost the BoG GHc 10 to print a unit of currency that has a face value of GHc 200, the profit of GHc 190 on each unit of currency is the seigniorage,
“The Central Bank is likely to be making a profit of about GHc 3.8 billion if it prints 20 million pieces of the GHc 200 notes. ” he alleged.
Source: Clement Akoloh/africanewsradio.com