BoG’s zero financing policy needless – Osarfo-Marfo

The Senior Minister-designate Yaw Osafo-Marfo has served notice the new government under President Nana Akufo-Addo is not ready to yield to the IMF’s demand for the Bank of Ghana to roll out zero financing for government budget deficit.

“Zero-financing from Bank of Ghana was unnecessary and we’ll have to review it,” the nominee told Parliament’s Appointments Committee Thursday.

The Institute for Fiscal Studies (IFS) is on record to have taken a swipe at the Central Bank and the previous National Democratic Congress (NDC) administration for yielding to pressure from the IMF to adhere to the zero financing policy.

According to the IFS it is totally unacceptable to scrap the 10% lending to government from 2016 except in emergency cases.

Mr. Marfo told the 26-member Committee the new administration is already in talks with the Breton Wood institution to review the three-year agreement aimed at disbursing a total of 918 million dollars (USD 918,000,000) to the West African country.

The programme aims to restore debt sustainability and macroeconomic stability in the country; to foster a return to high growth and job creation, while protecting social spending.

Ghana has so far received a total of about US$464.6 million as disbursements from the IMF.

The latest was on September 28, 2016.

Marfo said the current state of the programme squeezes out “fiscal space out of the economy” and therefore needs a review.

“We will certainly review the IMF programme. The current state of the programme squeezes the fiscal space out of the economy, but our manifesto needs physical space to implement.

“Most of the targets set under the programme have been missed already and so the IMF themselves will be raising questions even if we don’t do anything about it. The fiscal deficit was thought to be 5% but from what I am seeing from the Bank of Ghana, we are doing around 8%, so we will certainly review the programme,” the 74-year-old said.