The government says it remains committed and will continue to implement the International Monetary Fund ECF programme even though Parliament has passed a Bank of Ghana (BoG) financing limit of 5 per cent of previous year’s revenue in the Bank of Ghana Amendment Bill.
This amendment of the BoG Bill comes in the middle of the IMF programme that requires zero BoG financing with a window of 2 per cent to 3 per cent of BoG financing for liquidity management.
A statement issued by the Ministry of Finance and signed by Deputy Minister of Finance Cassiel Ato Forson in Accra yesterday said “we will continue to adhere to the requirement of zero BoG financing under the IMF-ECF Programme as a matter of fiscal prudence as we have done since the beginning of the year.”
“We wish to emphasise that significant progress has been made in implementing the Programme and this is evident in two successful reviews of the IMF Programme. The third review mission was concluded in May, 2016 and we are awaiting the fund to go to the Board for the approval of the third review on August 29,” the statement.
The statement said currently, the government has no incentive to borrow from the BoG where Monetary Policy Committee rate was s above the market rate for the Government of Ghana instrument.
“Prior to this year, we observed a reduction in BoG financing of the budget from 10 per cent, under the BoG Act, to 5 per cent in 2015. Furthermore, it should be noted that under the Fund programme, government is allowed to temporarily borrow up to 2 per cent of previous year’s revenue within a 90- day windows in special circumstances,” the statement said.
The statement said “to help us manage liquidity pressures under the zero financing, we are improving domestic revenue mobilisation with the implementation of tax measures as well as improving tax administration. We have switched successfully to the Ghana Stock Exchange to finance long-term budget needs, compared to the relatively short-term BoG Treasury Bill market or auctions.”
Additionally, the statement said a number of initiatives to strengthen cash management were being implemented.
It said a cash management operational framework which forecasts revenue and public expenditure numbers two weeks ahead of time had been developed.
The framework provides information on government cash flows on a weekly basis. The new Public Financial Management (PFM) Bill, currently being debated in Parliament, contains provisions for prudent economic management to codify for the first time, some of the measures being implemented under the Government’s own Home-Grown (and now IMF) Programme.
It said for the first time, extensive provisions relating to budget and fiscal rules, including the budget deficit, financing and public debt, were also codified in the PFM Bill.
On Wednesday August, 3, 2016, Parliament passed the Bank of Ghana Amendment Bill.
The objective of the amendment is to significantly strengthen the Central Bank’s functional autonomy, governance and ability to respond to banking sector crises.
The Bill seeks to plug the loopholes identified in Act 612. These loopholes were identified in consequence of an examination of current international trends and what pertains in other jurisdiction. The amendment also seeks to separate the autonomy provisioned from other objectives of the bank to strengthen the autonomy of the Bank of Ghana in the performance of its functions.
The Bill introduces a new qualification criterion for Board members. Under the new bill, a person is qualified for appointment as a member of the Board if that person has extensive knowledge and experience as regards monetary, banking, financial and economic matters or any discipline relevant to the functions of the Board.
By Times Reporter