The Bank of Ghana and the Finance Ministry have reached an agreement to stop financing the national budget, a move aimed at securing a funding program from the International Monetary Fund (IMF) and controlling the country’s rising debt and inflation.
Mr Osei Gyasi, the head of banking supervision at the Bank of Ghana, announced the decision at the launch of the 60th anniversary of the Institute of Chartered Accountants Ghana.
He said the zero financing policy will put an end to the monetary financing of government deficits, which was implemented in 2022 to prevent domestic default. The policy is expected to trigger a disinflation path, reduce the policy rate, and restore the country’s reserve buffers.
The most critical step in securing the IMF’s Emergency Credit Facility program is the Domestic Debt Exchange program, which is a guarantee of Ghana’s debt sustainability over the medium term, according to Gyasi.
The successful implementation of the program is expected to improve the debt metrics and reset the economy to stability.
Gyasi added that the Bank of Ghana has issued regulatory interventions to mitigate the potential impact of regulated financial institutions and will engage with all stakeholders to minimize the impact on the banking industry.
The Central Bank will also engage with the Institute of Chartered Accountants to institutionalize the partnership and influence policy direction.
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