Dr Abdul Nasiru Issahaku BoG to submit bill to parliament backing zero-financing of gov't

The new law aims to cement the central banks functional autonomy and its ability to respond to crisis in the financial sector.

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Dr Abdul Nasiru Issahaku play

Dr Abdul Nasiru Issahaku

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The Governor of the Bank of Ghana is set to present a bill to parliament to back its zero-financing policy where government will no longer be able to borrow from the central bank.

The new law aims to cement the central banks functional autonomy and its ability to respond to crisis in the financial sector.

Addressing questions from members of Parliament's Public Accounts Committee last Thursday, Dr. Abdul Nasiru Issahaku said though the bank had stopped financing government, he is hopeful the passage of the bill will stop the practise.

Before the amendment is operative we have already started zero-financing, so as we speak now there is no financing to government from BoG - but the Act will soon be brought before Parliament as a bill,” Issahaku said.

A Deputy Minister of Finance, Mr Cassiel Ato Forson, who was seated next to the governor, confirmed that the government had stopped receiving loans from the central bank.

He said: “The Ministry of Finance and Bank of Ghana signed the Fiscal Agency Agreement, in which some of the provisions include zero-financing starting from this year. We have gone through the year - we are in June now and we are not enjoying any financing from the Bank, just to give you that assurance.”

Under existing law, the government is allowed to borrow from the central bank up to 10 percent to finance the nation's budget.

However, due to the Extended Credit Facility of the International Monetary Fund (IMF), government can no longer borrow from the central bank.

Over the years, successive governments have been accused of borrowing more than the stipulated 10 percent from the central bank.

Upon assuming office following the early retirement of Dr. Henry Kofi Wampah, Issahaku pledged to control government's excessive borrowing, reign inflation and boost confidence in the economy.