Some economists have made a strong case for Bank of Ghana(BoG) to finance government’s budget by targeting some specific areas of the economy.
According to them, such a move will reduce the financial pressure on government as it moves from aid to trade with developed partners.
The International Monetary Fund (IMF) as part of its conditionalities directed that the Bank of Ghana should not finance government budget, even though government capped the financing at 5 percent.
Speaking to Citi Business News on the issue, Economist, Dr. Eric Osei-Assibey was of the view that the central bank must be allowed to finance critical sectors of the economic by at least 5 percent.
“We are now talking about fiscal dominance, the IMF is saying that we should reduce central bank financing to government to zero percent. Look at what is happening around us. Infrastructure deficit,” he said, adding that all indications show that “government does not have the money for infrastructure”.
Dr. Osei-Assibey was of the view that government must be allowed to explore other financial options if Ghana can wean itself of aid.
He maintained that the BoG can always be allowed to invest in high yielding portfolios to bring returns to the nation.
“We are talking about moving away from aid, isn’t it?, so aid is no longer going to come so we need to find a more innovative way of financing. The central bank can target certain infrastructure, and high yielding productive sectors and support government in that direction”.
By: Lawrence Segbefia/citibusinessnews.com/Ghana