The Finance Minister, Ken Ofori-Atta, on Thursday presented a report to Parliament over government’s plan to trigger section 30 (6) of the Bank of Ghana Act.
This is to help government obtain 10 billion Ghana Cedis in domestic financing from the Central Bank to deal with the economic challenges occasioned by the coronavirus pandemic.
Addressing the House after tabling the report in Parliament, Ken Ofori-Atta indicated that the Central Bank has already advanced 5.5 billion Ghana Cedis to government this month to meet its financial obligations.
“Given the exceptional circumstances and the challenges, the Minister of Finance, the Governor of the Bank of Ghana and the Controller and Accountant General, as required under Section 30 of the Bank of Ghana (Act 612) as amended, have agreed to trigger the emergency financing provision under the law, which permits increasing the limit on the purchase of Government securities by Bank of Ghana in the event of any emergency, to help finance the residual expenditures,” the Minister said
The GH¢ 5.5 billion first installment of the bond was released on May 15, 2020.
By this, the Bank of Ghana has set aside a Memorandum of Understanding with the IMF which bars it from financing the government’s budget which had been the case in previous years.
An additional 4.5 billion cedis will be provided through the purchase of government assets, but that will be dependent on developments going forward.
The outbreak of the novel Coronavirus has had dire consequences on the economy. As a result, government has been implementing various fiscal and monetary measures to fill the outstanding financing gap and mitigate the adverse effect and provide relief for businesses and households.
These include the IMF Rapid Credit Facility of US$1 billion, World Bank Development Policy Operation (DPO) of US$350 million and the Stabilization Fund of $ 219 million.
The outbreak has brought three years of economic growth of 6% or more to a sudden halt, with the Minister of Finance anticipating that growth could slow to 1.5%, the least in 37 years.
He has already indicated that the cumulative effect of the novel coronavirus pandemic will cost Ghana GHS9.505 billion.
Meanwhile, the Ranking Member on the Finance Committee of Parliament, Cassiel Ato Forson, says the Minority will resist what he calls government’s ploy to obtain state funds for election 2020 campaign.