BoG defends financing of gov’texpenditure last year

By Benson A ul

The central bank says the International Monetary Fund (IMF) supported the bank’s financing of the government in 2022 as a crisis management tool to help keep government machinery running and the economy together.

BoG said while the IMF and the central bank saw the lending to be “suboptimal,” “it was agreed that this temporary arrangement was needed.”

The central bank was responding to public commentary on BoG’s financing of the government in 2022 that it was inaccurate that the IMF came and uncovered the extent of the deficit financing.

The central bank has come under pressure in recent times over its decision to support the government’s budget in 2022, with some describing the decision as reckless.

On a net basis, the BoG last year financed the government to the tune

GH¢44.5 billion.

The bank in statement said the IMF team assessed it to be necessary but part of a comprehensive solution to be addressed in the government’s economic policies and programmes to be supported by the IMF.

The statement signed by the Secretary of BoG, Ms Sandra Thompson, also explained that the crisis that the country found itself in last year meant that the central bank lending was critical “to avert a disorderly default of both servicing for domestic and external debt.”

It noted that the funding helped to finance critical imports to keep the economy on the stable path.

The bank said it was compelled to re-state its earlier assessments on the matter and address misinformation and inaccuracies while helping to anchor the discussions in the public domain.