Zero financing of government’s budget by BoG will hurt economy – Economist

An Economist, Dr Adu Owusu Sarkodie, has kicked against the implemen­tation of zero financing of the government’s budget by the Bank of Ghana (BoG).

He maintained that looking at the current state of the econo­my and the financial challenges facing the economy, the country should have up to 5 per cent of Central Bank financing of the government’s budget.

Speaking on Joy TV’s PM Express Business Edition pro­gramme on Friday, Dr Sarkodie said the government owned BoG, and everything must be done to ensure that when the country is in crisis, the Central Bank would be able to support the economy.

“I was one of those who wrote and spoke against it when Ghana secured a programme with the IMF in 2025 and one of the conditions was the Zero Financing of Government’s Bud­get”. There should be some limit when it comes to the financing of government’s budget, but for zero financing looking at the current state of the economy,” he added.

    

BoG ended last year recording GH?60 billion loss mainly due to the Central Bank’s participation in the Domestic Debt Exchange Programme (DDEP), which has led to some pushing for strict enforcement of the Zero Financ­ing Policy of the government’s budget.

Commenting on BoG’s loss for 2022, the economist rejected claims that it was out of place for the BoG to step in and support the economy in 2022 when it was struck with COVID-19.

The Bank of Ghana earlier this year started enforcing the zero financing of Ghana’s budget.

This was one of the con­ditions needed to help Ghana secure an IMF programme this year.

The Bank of Ghana and the Ministry of Finance have already signed a Memorandum of Understanding (MoU) to aid the implementation of this policy.

Speaking on the same pro­gramme, the president of the Association of Ghana Indus­tries (AGI), Dr Humphrey Ayim-Darke, said he was also opposed to the full implementa­tion of the zero financing of the Budget.

He explained, “This is because of the expected impact on the larger economy and how that could affect the operations of pri­vate enterprises in the country.”

Dr Ayim-Darke maintained that there should be some level of support for the government.

“Maybe, we can up at up to 5 per cent of the previous year’s revenue mobilised by the Ghana Revenue Authority (GRA)” he said.