Bank of Ghana explains decision to finance gov't expenditure in 2022 budget

The Bank of Ghana has reacted to reports it financed the 2022 budget deficit with GHS44.5billion.

Ernest Addison

According to the central bank, it was part of a crisis management tool used in dealing with the difficulties in 2022.

The Bank said this in a statement dated February 9, 2023.

The Governor of the BoG, Dr Ernest Addison, said the economy would have been destabilised and come to a standstill had his outfit not stepped in to support the government.

Speaking at the SIGA annual stakeholder meeting in Kwahu Abetifi in the Eastern Region on Thursday, Dr Addison said: “We need to remember where we are coming from at the beginning of 2022 when we lost access to the capital market.”

“This is a government that had access to the capital market for at least $3 billion each year, but we started 2022 with the downgrading of the economy and, therefore, the source of financing was not available.

“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 said.

He said the central bank, therefore, had to step in to help the country go through those difficult times.

It is important to recognise that we could have gone into this crisis much earlier than we went; if the BoG hadn’t stepped in, investors in government bonds were not going to be paid the interest,” he added.

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 Governor said the situation of the central bank financing the government, however, became unsustainable by the middle of 2022, hence the decision of the government to approach the International Monetary Fund (IMF) for support.

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