IMF acknowledges BoG’s end to govt financing

The International Monetary Fund (IMF) has acknowledged corrective measures by the Bank of Ghana (BoG) after a temporary breach of lending limits to government.

The Fund said the corrective action contributed to the Executive Board’s approval of Ghana’s final US$371 million disbursement under the Extended Credit Facility (ECF), bringing total programme disbursements to US$3 billion.

The IMF said this in its assessment following the sixth review of Ghana’s ECF-supported programme.

According to the Fund, the BoG breached the end-December 2025 performance criterion on the ceiling for claims on the central government and public entities.

It, however, said the breach was temporary and by a small margin, arising from cost-sharing arrangements under the Domestic Gold Purchase Programme (DGPP), and consequently granted a waiver during the sixth review.

The IMF said the Central Bank subsequently implemented corrective measures to address the deviation.

In May 2026, the BoG reaffirmed its commitment to maintaining zero monetary financing of government budgets, stating that it would not finance fiscal deficits through money creation in order to safeguard price stability and protect the cedi.

The Bank said such financing had contributed to inflation, currency depreciation and a loss of purchasing power among households.

“Adherence to zero monetary financing strengthens policy credibility and supports sustainable economic recovery, particularly by preserving the purchasing power of incomes and protecting vulnerable households,” the Bank said.

While describing Ghana’s performance under the ECF programme as broadly satisfactory, the IMF identified areas requiring sustained policy attention under the new Policy Coordination Instrument (PCI) to consolidate macroeconomic stability and support inclusive, private sector-led growth.

The Fund said although resilience in the financial sector had improved, vulnerabilities remained among some state-owned and private banks and specialised deposit-taking institutions.

It said sustained supervisory action, decisive corrective measures and the completion of a crisis management and resolution framework would be essential to safeguarding financial stability and supporting the recovery of credit intermediation.

The IMF welcomed the BoG’s cautious monetary policy easing as inflation returned to the target range but stressed that maintaining policy credibility would require safeguarding the Central Bank’s independence and permanently ending quasi-fiscal activities.

It also called for the transfer of the gold purchase programme to the Ghana Gold Board (GoldBod) and urged the authorities to fulfil their commitment to recapitalise the BoG by 2032.

On fiscal policy, the Fund urged Ghana to achieve the planned reduction in the primary surplus to 0.5 per cent from 2027, consistent with debt sustainability, while strengthening oversight of state-owned enterprises in the energy and cocoa sectors.

The IMF also called for the timely implementation of a reformed asset declaration framework and the passage of the revised Conduct of Public Officials Bill to enhance transparency and strengthen public confidence.

“Ghana's stabilisation gains are real but locking them in will require continued discipline on fiscal policy, financial supervision, debt management, and governance reform ahead,” Mr Bo Li, Deputy Managing Director of the IMF, said.

He encouraged the authorities to strengthen domestic revenue mobilisation, improve public financial and investment management and enhance social protection for vulnerable households.

GNA