Ghana’s Central Bank Governor, Dr Ernest Addison, has signed a Memorandum of Understanding (MoU) with the government through the Ministry of Finance to end monetary financing of the national budget.
The MoU was signed on May 2, 2023 and took effect on May 1, 2023. The MoU will come into force should the International Monetary Fund approve Ghana’s request for a $3 billion loan facility.
The MoU to end zero financing forms part of a requirement aimed at securing Ghana’s loan request with the IMF after the country earlier reached a Staff-Level Agreement in December 2022. The Central Bank Governor believes that Ghana’s deal with the IMF will be approved before the end of May 2023.
The MoU is a significant step towards Ghana’s economic stability and growth. It will help reduce inflation and stabilize the currency by limiting the amount of money that can be printed to finance government spending. This will also help reduce the country’s debt burden and improve its credit rating.
The agreement is also expected to increase investor confidence in Ghana’s economy and attract more foreign investment. This will create more jobs and boost economic growth in the country.
However, some experts have expressed concerns that ending monetary financing could lead to austerity measures and hurt social programs. They argue that Ghana needs more investment in education, healthcare, and infrastructure to achieve sustainable development.
Despite these concerns, Dr Addison is confident that ending monetary financing is necessary for Ghana’s long-term economic stability and growth. He believes that the country can achieve sustainable development by attracting more foreign investment and implementing structural reforms.