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IMF Review Will Look At Options for Deficit Financing

The Bank of Ghana has told Citi Business News it will strictly abide by any agreement reached by the government and the International Monetary Fund (IMF) on the financing of government’s budget deficit.

It follows a review of the extended credit facility by the IMF and government, in February.

Governor Dr. Abdul Nashiru Issahaku believes the review should not affect the medium to long term projections of the Central Bank in maintaining fiscal stability.

“For us whatever the outcome of the renegotiation and I did mention, the objective must be to stabilize the macro economy and the renegotiation has to be agreed with the fund whatever it is whether it is five percent or zero percent,” he said.

The NPP government has given indication it will resort to the 5 percent budget deficit financing provided for by the BoG Act.

The Senior Minister Nominee, Yaw Osafo Maafo stated that the NPP government may access financing from the Bank of Ghana.

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He argues that the decision is to allow the government losen up the fiscal space that will be needed to undertake economic plans outlined in propelling economic growth.

“It is a fact that under Article 181 the law was breached, and we want harmony, we do not want the situation where the international community will come in and also read meaning that Ghana has entered in to an illegality with the IMF. They are coming early in February as a staff for the review exercise. We must do the review before our budget comes out early in March,” he said before the Appointment Committee of parliament.

As part of the conditions of the extended credit facility, the IMF opposed the central bank’s financing of government’s budget deficit.

Though the erstwhile NDC government stuck with a zero budget deficit financing in 2016, Parliament approved funding of government’s budget deficit of up to a maximum of 5 percent of the previous year’s budget.

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But Dr. Issahaku maintains that the agreement by all parties will determine any further action.

“Our efforts as a central bank must support any agreement or effort at stabilizing the macro economy and that remains our position.”

By: Pius Amihere Eduku/citibusinessnews.com/Ghana

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