Ghana’s central bank will not finance the government’s budget, its new governor, Ernest Addison, said on Friday as the regulator seeks to keep fiscal consolidation on track. Ghanaian lawmakers last year passed a law allowing the central bank to finance the deficit up to five per cent of the previous year’s tax revenues, breaching terms of a $918 million (Sh91 billion) aid deal with the International Monetary Fund, which demanded that such funding be eliminated.
The major commodities exporter signed the three-year deal in April 2015 to restore fiscal balance to an economy dogged by high deficits, widening public debt and inflation. Addison said Bank of Ghana did not finance the deficit last year, although the current law allows limited funding. “We are staying on course… we do not expect that we’d have a situation where the government will come for financing from the central bank,” he told reporters in Washington on the side-lines of this year’s IMF Spring meetings.