A former Finance Minister, Seth Terkper, has described as dangerous the continuous financing of government expenditure by the Bank of Ghana (BoG) without any restrictions.
He recalled that in previous times, the Central Bank has been mindful of not financing government expenditure above 5% of revenue generated in the previous year – a condition abandoned by the current administration.
Speaking to Journalists to review the Mid-Year Budget, Mr. Terkper disclosed that the Central Bank financing of government expenditure is reaching alarming levels that may not be sustainable for Ghana’s economy.
According to him, over ¢32 billion have been extended to government by the Central Bank since 2020 with the first quarter of 2022, alone witnessing Central Bank financing of ¢22 billion.
“We’re talking about ¢32 billion. This is close to the deficit for 2022. If you take the 2020 and the current financing and we are just in the first half of the year. You ask the question, is BoG going to continue with this financing?” he queried.
Mr. Terkper expressed worry that the BoG may be printing money to support the government without any checks from the legislature – a development he warns is against the monetary policy rules of the country.
Questioning the source of the ¢32 billion financing, Mr. Terkper, pointed out that the figures already show that the BoG has depleted it reserves, hence will not get enough money to lend to government.
“It shows in the exchange rate. This makes us ask the question whether we are already printing money for government. This is where we are making the deduction from whether we are probably printing currency”, he added.
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