–BY Issah Olegor
The Bank of Ghana has reaffirmed its commitment to adhering to a zero-financing policy for the country’s budget moving forward.
This commitment follows the signing of a Memorandum of Understanding between the Central Bank and the Ministry of Finance in 2023.
Key Measures
To achieve this goal, the Bank of Ghana will continue to implement policy measures aimed at optimizing its investment portfolio and operating cost mix.
These measures are designed to bolster efficiency and profitability, as outlined in the 2024 Financial Statement audited by Deloitte.
The statement highlights the Bank’s focus on policy solvency measures to ensure a recovery and build-back of a positive equity position within the medium to long term.
Economic Outlook
The Bank of Ghana expects macroeconomic conditions to continue improving, with inflation projected to decline towards the medium-term target.
As a result, interest rates are expected to decrease, leading to a reduction in the Cost of Open Market Operations. A decline in inflation is also anticipated to support exchange rate stabilization.
Implications
By adhering to the zero-financing policy, the Bank of Ghana aims to maintain its policy mandate and operate efficiently and effectively on a going concern basis.
This move is expected to contribute to the country’s economic stability and growth.
The Bank of Ghana’s commitment to zero budget financing is a significant step towards promoting fiscal discipline and economic stability.
By not financing the budget, the government will be required to rely on alternative sources of funding, such as taxes and debt issuance, which can help to promote transparency and accountability in government spending.
