$3bn IMF deal: Zero financing of govt’s budget has been met – BoG Governor

The Governor of the Bank of Ghana (BoG) Dr Ernest Addison has said that the central bank has met its target of zero financing of the government’s budget under a programme with the International Monetary Fund (IMF).

Addressing the 113th Monetary Policy Committee (MPC) press conference in Accra on Monday, July 24, Dr Addison said “Implementation of the IMF-supported Extended Credit Facility programme for the first six-months of 2023 is broadly in line with the Performance Criteria targets for June 2023. While the programme envisaged a drawdown in reserves of close to US$100 million, the BoG built reserves in excess of U$S1 billion.

“BoG financing of the budget, under the programme, is expected to be zero and this has been met. Regarding the Monetary Policy Consultation clause, inflation, as at June 2023 was within the target band.”

The BoG had signed an agreement with the Finance Ministry to commit to zero financing of this year’s budget and subsequent ones.

It is recalled that while speaking at the launch of the 60th-anniversary celebrations by the Institute of Chartered Accountants Ghana (ICAG), the Head of Banking Supervision at the Bank of Ghana, Osei Gyasi, said the move was necessary to contain the country’s rising debt as well as control inflation.

“Monetary financing of the government deficit which was pursued to prevent domestic default arising from systemic auction failures during 2022 will end under the programme”, he said.

Mr. Gyasi added “to achieve this, the Bank of Ghana and the Ministry of Finance will commit to zero-financing of the budget in 2023 and beyond which is expected to trigger a disinflation path and downward trends in the policy rate as well as restore the country’s reserve buffers to at least three months of import cover by end-2025.”