The domestic financing is from the BoG is to help the government deal with the economic challenges caused by the coronavirus pandemic.
Mr Ofori-Atta said this on Thursday (May 28, 2020) when he presented a report to Parliament over the government’s plan to trigger section 30 (6) of the Bank of Ghana Act.
Addressing the House after tabling the report in Parliament, the minister said the BoG has already advanced GHC5.5 billion to THE government this month to meet its financial obligations.
“Given the exceptional circumstances and the challenges, the Minister of Finance, the Governor of the Bank of Ghana and the Controller and Accountant General, as required under Section 30 of the Bank of Ghana (Act 612) as amended, have agreed to trigger the emergency financing provision under the law, which permits increasing the limit on the purchase of Government securities by Bank of Ghana in the event of any emergency, to help finance the residual expenditures,” the Minister said
He said the GHC5.5 billion first installment of the bond was released on May 15, 2020.
This means that the Central Bank has set aside a Memorandum of Understanding with the IMF which prevents it from financing the government’s budget which had been the case in previous years.
The GHC4.5billion left will be provided through the purchase of government assets, but that will be dependent on developments going forward.
Effect of coronavirus on the economy
The Ghanaian economy has been greatly affected by the COVID-19 pandemic. The outbreak has halted a three years economic growth of 6% or more. The Finance Minister now projects the growth to slow to 1.5%, the least in 37 years.
He has already indicated that the cumulative effect of the novel coronavirus pandemic will cost Ghana GHC9.505 billion.
This has led to the government implementing various fiscal and monetary measures to fill the outstanding financing gap and mitigate the adverse effect and provide relief for businesses and households.
These include the IMF Rapid Credit Facility of US$1 billion, World Bank Development Policy Operation (DPO) of US$350 million, and the Stabilization Fund of $ 219 million.
Meanwhile, the Ranking Member on the Finance Committee of Parliament, Cassiel Ato Forson, said the Minority will resist what he describes as the government’s ploy to obtain state funds for the election 2020 campaign.