BoG justifies financing of government’s 2022 budget

The Bank of Ghana (BoG) has justified financing of the government’s 2022 budget with about GH¢44.5 billion.

According to the Central Bank, its net claims on the government increased by about ¢44.5 billion at the end of De­cember 2022.

This is coming after renewed discussions in the media regard­ing the BoG’s financing of the budget in 2022.

In a statement issued by the BoG in Accra on Thursday, it said its financing of the govern­ment was part of crises manage­ment tools to help deal with the difficulties of 2022.

“It must be recognised that the ongoing debt operations are part of the corrective measures designed to address the financing problem of the budget. Bank of Ghana financing was part of crises management tools used in dealing with the difficulties of 2022,” it said.

Against this backdrop, the details of the Bank of Ghana’s claims on government as at December 2022 were GH¢7.2 billion, representing its purchase of treasury bonds from banks to provide them with liquidity to enable them meet their obligation to customers, and GH¢8.9 billion, representing on-lending facili­ties granted by the international Monetary Fund (IMF) for onward lending to the government.

The rest are GH¢37.9 billion, representing overdraft extended to the government, solely meant for the purpose of addressing auction shortfalls and paying cus­tomers whose bonds had matured and for which the government did not have adequate resources.

At the same time, the gov­ernment deposit liabilities at the Bank of Ghana recorded an increase of GH¢9.5 billion in the course of 2022.

“It will be important to recall the circumstances under which the government decided to seek IMF support. Ghana had lost ac­cess to the International Capital Market, domestic revenue was significantly underperforming and not realised, pushing the state of government finances into near external and domestic default,” the statement said.

It said, “With the above, the policy choices were not that of business as usual but rather a more challenged conduct of macroeconomic policy in the context of crisis”.

The statement said, “The government needed to finance critical expenditures for which Bank of Ghana needed to provide the necessary financing to avert a disorderly default of both servicing for domestic and external debt, including financ­ing critical imports to keep the economy on the stable path”.


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