Bank of Ghana (BoG) Governor, Dr. Ernest Addison, has justified the bank’s decision to fund government spending in 2022 – stating that not doing so would have destabilized the economy.
As of November 2022, the broad fiscal deficit exceeded the target of 6.7 percent of gross domestic product (GDP) – standing at 9.8 percent of GDP. With underperforming domestic revenue and no access to the international capital market, there was a risk of default.
The central bank’s intervention, Dr. Addison explains, was therefore necessary to prevent an economic standstill.
In all, the central bank’s net claims to the government amounted to GH¢44.5billion at the end of 2022.
Governor Addison explained that the situation became unsustainable by mid-2022, leading to government’s decision to seek support from the International Monetary Fund (IMF).
He added that revenue measures were not successful, leading to financial distress: “In addition to that, the revenue measures were not working – with the revenue projections performing below targets.
All those meant that government finances were in trouble, as expenditures needed to be funded but there was no money,” he narrated.
Source: b&ft
