Bank of Ghana says the rising government expenditure is threatening the economy

Bank of Ghana says the hike in the government’s expenditure is a threat to the economy.
The BoG Governor, Dr Addison disclosed the information.
He said the hike forced the BoG to keep the country’s policy rate at 16%.

The Bank of Ghana (BoG) has disclosed that the rising government expenditure and weakened revenue levels are the major threats to the swift stabilisation of the economy.

According to the central bank, some of these concerns forced the Monetary Policy Committee (MPC) to keep the country’s policy rate unchanged at 16 percent.

The Governor of the BoG, Dr Ernest Addison said this while answering questions from journalists after the MPC meeting to review the health of the economy in Accra.

“This is the fourth time this year that the committee has held the rate since January 2019,” he said.

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Dr Addison noted that the MPC was also worried about the continued revenue weakness which requires expenditure adjustments larger than the projected budget deficit.

He, however, was optimistic that despite this challenge the situation would improve “full implementation of the new tax measures will likely impact revenue performance in the last quarter.”

This, he noted could help achieve the fiscal deficit target set for the year. “If the fiscal situation was better and stable we would have gone down on the policy rate,” he added.

“We should not forget about the fact that budget is particularly dependent on non-resident financing and we don’t want to take steps that would jeopardize the situation,” the BoG Governor concluded.