Bank of Ghana Should Provide Some Level of Support for Government’s Activities – Prof Gatsi
According to the Dean of the Business School of the University of Cape Coast, Professor John Gatsi, while there should be some level of support for the activities of the government by the central bank, it should be situated within the fiscal laws of the country and those laws respected by all players. This follows…
According to the Dean of the Business School of the University of Cape Coast, Professor John Gatsi, while there should be some level of support for the activities of the government by the central bank, it should be situated within the fiscal laws of the country and those laws respected by all players. This follows the signing of a Memorandum of Understanding (MoU) by the Bank of Ghana (BoG) and the government to ensure a zero financing of the government’s budgets.
The Governor, Dr Ernest Addison, confirmed that the MoU was signed by both parties on May 2, 2023, and has since taken effect from May 1, 2023. The MoU will come into force should the International Monetary Fund approve Ghana’s request for a $3 billion loan facility.
Prof Gatsi noted that the country’s law stipulates that lending to the central government by the Bank of Ghana should not exceed five percent of the previous year’s revenue, and this should be respected. He suggested that the need for the MoU was occasioned by the lack of adherence to the fiscal laws of the country.
“For the most part, we don’t actually need an MoU, we only need respect for the law. It is just a sign that we are not adhering to our fiscal laws in the country,” Prof Gatsi said.
He added that in the earlier International Monetary Fund agreement that the government inherited, the IMF was asking for zero financing. However, in the overall interest of the government, Parliament felt that there should be some level of Bank of Ghana support for the budget if need be, but that should not go beyond five percent.
In a nutshell, Prof Gatsi believes that there should be some level of financing of government activities by the central bank, but that level of support should be respected and should not exceed what has been stated by the law.
