Mahama: No BoG financing of Govt in 2016

President John Dramani Mahama has rebuffed claims by his critics that Ghana’s economy is performing poorly, saying the government has not borrowed any money from the central bank this year.

According to him, the operations of government have been financed using revenue generated through taxes and other means, which, in his view, proves the economy, is buoyant.

Mr.Mahama explained that even though the government has a borrowing limit of up to 10% of the budget in 2015, his administration has opted not to utilise that window.

“Under the extended credit facility of the International Monetary Fund (IMF), this year we started a zero central bank financing. So, every expenditure by government is not borrowed from the central bank,” he said on Volta Star radio in the Volta region Thursday, April 21, during his ‘Accounting to the People’ tour.

Mr. Mahama explained that in the past, the government had a 10% ceiling and could borrow up to 20% of the previous year’s budget, but such borrowing, he added, needed to be balanced so it does not exceed 10% by the end of the year.

According to him, “with every payment and expenditure that we are making, this economy is more resilient and disciplined because we are using the revenues we collected”.

He further explained that gold and oil, which are major commodities exported by Ghana, saw a huge drop in prices in recent times “yet the macro economy is performing well”.

The President pointed out that critics, who accuse the government of running the economy down are mere propagandist because “at the end of 2012, we had a 12% deficit to GDP. The year before, we had come down to 9.6% and last year, we came down to 7.3% and this year the deficit is 5.3%, so, it shows that the economy is showing resilience on the macroeconomic front”.

Mr.Mahama noted that through good monetary and fiscal policies, “inflation is slowing and we are expecting a decline soon. When inflation comes down, interest rates will also follow, the cedi has stabilised for a while and that cannot be an economy in crises. Public debt is also slowing and there are many signs that show that the economy is doing better”.