Increasing government expenditure threatening economy – BoG

The governor of the Bank of Ghana, Dr Ernest Addison says the rising government spending and weakened revenue levels are the major threats to the swift stabilisation of the economy.

Governor of the Bank of Ghana, Dr Ernest Addison

Answering questions from journalists after the Monetary Policy Committee (MPC) meeting to review the health of the economy this week.

Dr Addison said that some of these concerns forced the Monetary Policy committee to keep the rate unchanged at 16%. This is the fourth time this year that the committee has held the rate since January 2019.

He added that MPC was also worried about continued revenue weakness which requires expenditure adjustments to contain the larger than the projected budget deficit.

He, however, expressed optimism 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 also believed that 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.

He said 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. 

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