The Finance Minister, Ken Ofori-Atta, has pledged the government's full commitment to strict zero financing of the budget by the Bank of Ghana (BoG).

Mr. Ofori-Atta disclosed this on PM Express Business with host George Wiafe in Washington DC USA during the Annual World Bank Spring meetings.

The minister stated that government will stick to zero-financing from the central bank to help contain the Ghana’s rising budget deficit.

Status of zero financing of budget

Mr. Ofori-Atta announced that the Finance Ministry will sign a Memorandum of Understanding on the zero financing with the BoG in the coming weeks.

This, he said, will give the needed necessary legal backing to the move after parliament’s approval. 

Responding to questions about challenges the MoU may cause to the government expenditure, Mr. Ofori-Atta said “we should remember that this is a constitutional requirement and it’s something that we should work at going forward”.

Concerns

Some analysts are worried that a strict enforcement of the zero financing policy may come with some challenges for the economy.

There are concerns that the economy may crush if the BoG is prevented from supporting government expenditure.

The Bank of Ghana recently disclosed that it was forced to finance the 2022 Budget, by releasing some funds to pay maturing bonds, arguing that if it had not been done, the economy could have been hit by some serious challenges.

The Bank of Ghana has already indicated it is committed to the zero financing.

Reviewing tax levels and rates in Ghana

Mr. Ofori-Atta has also indicated that government is willing to reduce the tax levels after it achieves economy stability.

“This government in the past has always demonstrated its commitment to review taxes when needed and we will not shy away from doing that”

He maintained that the taxes are now needed to turn around the economy.