We are fully complying with cap placed on budget financing - Bank of Ghana

The central bank has indicated that it has adversely reduced its support to the national budget in compliance with a cap placed on its financing to the government.

This was revealed when the Deputy Governor of the Bank of Ghana, Maxwell Opoku-Afari appeared before the Public Accounts Committee of Parliament on Wednesday, September 2, 2020.

The deputy governor explained to the committee that the central bank was fully complying with the directive.

“A cap was placed on the Central Bank’s financing, not exceeding five percent of the previous year’s revenue. At the time of amending and placing that cap, the stock of central bank financing as at that time before the Act came into effect was far exceeding that 5 percent.

So the understanding and interpretation was that that stock was ring-fenced and going forward, the Central Bank will then not finance budget beyond 5 percent,” he noted.

“I want to put on record that since that Act came into effect, the Central Bank has also entered into an MoU with the Ministry of Finance and we have actually limited it to zero percent.

So right from 2016 when the Act came into effect till now, the Central Bank’s financing to the budget has been zero percent until recently when we triggered session 30 and went into the asset purchase program,” the deputy governor added.