The International Monetary Fund (IMF) may force the government to limit Central Bank pre-financing of the government's budget to no more than 5% of predicted revenue in a year, according to economist Professor Lord Mensah.
He asserts that the IMF may enforce the requirement to restrain both inflation and government spending.
The government requested finance from the Bank of Ghana to pay for COVID-19-related expenses during the COVID-19 term.
Speaking to Joy Business, Prof. Mensah claimed that if the government requests assistance from the Fund, it may be subject to a requirement that it not seek central bank borrowing over 5% of anticipated income.
Before imposing the conditionality of 5% of anticipated revenue, he predicted that the IMF will examine how we had utilised central bank pre-financing.
In response to the topic of whether the Fund might push for zero percent, Prof. Mensah said that it would be difficult to impose such a conditionality given the crucial role that central bank lending plays in assisting governments' fiscal programmes.
The government's decision to wrap up discussions with a group from the International Monetary Fund in Ghana before submitting the Mid-Year Budget review to parliament has been praised by Prof. Mensah as appropriate.
He thinks it will be a good idea to utilise the mid-year budget to make it obvious to the investment community that the administration wants to take a different course.
He expressed confidence that the IMF's contribution will benefit the global business sector.
Budget delayed
Parliamentary Correspondent Kweku Asante has revealed that the mid-year budget review has been postponed to July 25, 2022.
On Wednesday, July 13, 2022, Ken Ofori-Atta, the finance minister, was supposed to provide an update on the first-half year revenue and expenditure estimates. However, the date was changed because of ongoing negotiations between the government and the International Monetary Fund for economic support.
After the talks with the visiting IMF team are finished, this is anticipated to provide the government the opportunity to maybe suggest some changes to the budget.
Later today, [12, 06, 2022] Tuesday, the IMF mission in Ghana will meet with the Finance Committee of Parliament as part of the ongoing discussions.
The delegation has been in Ghana since last week, when the nation announced its decision to seek financial assistance from the Fund once more due to some economic turmoil.
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