A Lawyer Petitions The Court To Stop Government’s Domestic Borrowing. Full Deets Here

Jonathan Amable, a private attorney, has petitioned the Supreme Court to prevent the Ghanaian government from launching any new domestic borrowing or debt financing initiatives without first receiving parliamentary approval.

If approved, the application would have a big influence on the nation’s borrowing and fiscal policies, which have come under fire due to growing public debt and economic difficulties.

The writ was filed on February 15, 2024, but the Attorney-General, who is representing the government, has not yet responded.

Treasury bills are among the debt instruments that the Ghanaian government has been using to raise money which includes— Treasury bills, Treasury bonds and advances from the Bank of Ghana (BoG) – without obtaining necessary approval from parliament for the terms of those borrowings.

The 1992 constitution, which stipulates that the terms and conditions of government borrowings must be submitted to and approved by parliament prior to taking effect, is violated by these actions, according to Mr. Amable, a specialist in corporate and public finance legal advisory services transactions.

Mr. Amable argued that the state’s borrowing practices are “inconsistent” with the constitution, particularly Article 181(4), which mandates parliamentary approval for the terms of debt contracts, in a thorough affidavit submitted in support of the motion.

He claims that in spite of the explicit and preemptive instructions found in articles 181(3), 181(4), and 181(6) of the 1992 constitution, the government has been actively borrowing money and establishing repayment obligations for the state.

The legal team for Mr. Amable contends that the unconstitutional borrowings, especially those made domestically, have produced an “unequal” system in which parliament has little control over domestic debt but visibility and authority over foreign borrowings.

“The government of Ghana ordinarily has a full view of loans the state raises from non-residents, but no control over loans raised by the state from Ghanaian residents,” the affidavit stated.

He also maintained that the government’s debt issuance policies violate the constitution’s provisions, posing serious risks to the financial system even though they are carried out in accordance with the Public Financial Management Act of 2016.

He said:

“The unconstitutional conduct of the state potentially jeopardises the entire Ghanaian financial sector and hard-earned capital of the investing public”

By arguing that allowing the government to continue borrowing without adequate parliamentary oversight will result in irreversible harm, Mr. Amable’s motion for an interlocutory injunction aims to stop any further borrowing until the case is resolved.

The applicant claims that because of the possible constitutional invalidity of the debt contracts, such harm cannot be made right through compensation or other legal means.

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Section 30 of the Bank of Ghana Act, 2002 (as amended), Section 61 of the Public Financial Management Act, 2016, and associated regulations are also being contested by Mr. Amable as unconstitutional because they allow the government to borrow money without parliamentary approval.

A US$10 billion COVID-19 relief bond deal between the Ministry of Finance and the BoG has also been specifically targeted by the applicant, who claims it is unconstitutional and wants it reversed.

The total amount of the nation’s domestic debt as of July 2024 was around GH¢291 billion, of which over GH¢289 billion was obtained through Treasury bills and other debt instruments that were issued without the consent of parliament.

According to official data, the public debt has increased to GH¢761 billion overall, up from GH¢608 billion at the end of 2023.