IFS raises alarm over discrepancies in gov't expenditure figures

quist

August 12, 2016 8:24 PM

IFS in a statement released to Pulse.com.gh said, “While we hold the view that abolishing central bank lending to the government is ill-advised, we are not aware of any change to the zero financing condition under the IMF programme.

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The Institute of Fiscal Studies has criticized government for not heeding to expenditure stipulations under the IMF bailout programe.

IFS raised concerns about the levels of financing by the Bank of Ghana to government, which was as much as GHC1.4 billion in the first quarter of 2016.

They described the move as contrary to the IMF’s condition of zero central bank financing in 2016.

“If the central bank is to provide financing to the government, where does this leave the IMF programme?” the think asked in a statement.

Government is required under the IMF-extended three year credit facility to undertake zero per cent financing of its budget from the central bank following the passage of the Bank of Ghana (BoG) Amendment Bill. Contrary to this, however, the BoG Act requires that the central bank’s monetary financing must not exceed 10 per cent of the previous year’s total revenues. But, consistently, the BoG has not been able to keep to this limit.

The IMF will in the coming days engage the government on the status of the country’s programme with the fund. This was after Parliament voted to amend the existing Bank of Ghana law.

This will allow for government borrowing from the Central Bank of up to five per cent of previous year’s revenue.

But IFS is worried about the breach of the IMF conditions and the possible implications of the country’s future relationship with the IMF.

The Institute of Fiscal Studies also observed a large discrepancy of GH¢1.7 billion in the January to May 2016 fiscal data provided by the government.

“In the light of the government’s financial management reforms, particularly the deployment of the Ghana Integrated Financial Management Information System (GIFMIS) within the public sector, a discrepancy figure of such large magnitude is puzzling,” the IFS said.

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