Business News of 2014-06-13

BoG denies printing new cedi notes to fund budget deficit

The Bank of Ghana (BoG) has denied claims by international ratings agency, Fitch, that the central bank has printed fresh currencies to fund government's budget deficit.

According to Ghana's central bank, the last request it made for printing of more Ghana cedi for circulation was in the first half of 2013, adding that the notes came later that same year.

Fitch's latest report on Ghana, released earlier this week, said the central bank was threatening further inflation and depreciation of the cedi by printing money to help finance the government’s budget deficit, which currently stands at a little over 2.1 percent.

But that central bank says Fitch's assertions are not accurate. However, the Bank of Ghana has admitted borrowing to government beyond the required limits, as stated in the report by Fitch.

Fitch has said the central bank's lending to government beyond a 10 percent requirement of the total tax collected for the previous year was bad for the already troubled economy.

According to the ratings agency, the central bank's decision to exceed the lending limit is the reason for the current budget deficit. The agency was worried that this could spell further doom for inflation and cedi depreciation figures.

But a source close to Bank of Ghana told Joy Business the debts would be paid back when funds from the cocoa syndication loan and Eurobond hits Bank of Ghana's account.

Meanwhile, Vice-President, Kwesi Bekoe Amissah-Arthur, has said that data available to government do not lend credence to observations by Fitch that the country's economy is dehydrated.

Source: myjoyonline.com
« Previous | Next »
View Comments
Sponsor Links
News Categories
Site Menu