Cut expenditure to the barest minimum and use fiscal gains to support Central Bank

Banking Consultant, Richard Atuahene has admonished government to support the Bank of Ghana so it can perform as the Central Bank it is.

Speaking to Starr FM on Monday, July 31, ahead of the presentation of the Mid-Year Budget Review to Parliament, the Banking Consultant urged government to cut expenditure to its barest minimum and use the fiscal gains to support the Bank of Ghana.

“The government may have to cut its expenditure, cut the expenditure to the barest minimum. So that it can use some of the fiscal gains to support the Central Bank. That is what is required. Now we have to look at the fiscal policy side. Because you need to recapitalize it,” Richard Atuahene said.

He continued, “You can only do that when your settlers on the other side are able to, because now the IMF is saying that you cannot refinance the government. If it was earlier they possibly could have refinanced it and that will have been. Now they are saying that zero financing and refinancing means that we will have to do our fiscal mathematics very well. So that we can get taxes or something to help the Bank of Ghana come to its position and function like a real Central Bank.”

This follows a report that Ghana’s government has written off half of the 77.6 billion cedis which is equivalent to $7 billion it owed to the Central Bank and replaced the remainder with a lower yielding, 15-year bond.

Meanwhile, Finance Minister Ken Ofori-Atta is visiting Parliament this morning to present the Mid-Year Budget Review.

The presentation will see the Minister updating Ghanaians on the state of the economy and the programme with the International Monetary Fund (IMF).