Prof Ackah suggests GHS 100bn BoG-backed loans to Gov’t
Economist with the Institute of Statistical, Social and Economic Research (ISSER), Professor Charles Ackah, is calling for increased financing of government’s budget by the Bank of Ghana.
His assertion comes on the back of some GHS 10.5bn financing of government’s budget during the Covid pandemic.
According to Prof. Ackah, budget financing by Central Banks is practiced in most countries, particularly developed countries.
Speaking on the Business Edition of PM Express on Thursday, Prof Ackah expressed the view that government at the moment, lacks the fiscal space to increase spending to stimulate aggregate demand and ultimately economic growth.
According to him, government within the present economic circumstances needs to spend more and not be austere.
“All over the world, countries have realised that the orthodox policies instituted by the Bretton Wood Institutions to finance development are not working anymore and as such are calling on Central Banks to finance development.
“Most developed countries are practicing quantitative easing to finance development and we should be doing the same.
“The government in this time needs to spend more to stimulate demand and spur economic growth to increase GDP and consequently reduce the country’s debt to GDP,” he remarked.
“At the moment government needs to create more fiscal space to spend and the Bank of Ghana must provide government with loans. If government can raise like GHS 100bn from the Central Bank to spend in critical areas of the economy without cutting expenditure, that will be very help for the economy,” he quipped.
Government, as part of marshaling resources to fight the Covid-19 pandemic and mitigate its adverse impact, borrowed GH¢ 10 billion from the Bank of Ghana through the purchase of government bonds by the Central Bank.
The loan, according to the Finance Minister, was to help finance the fiscal deficit gap created by the novel pandemic.
The GHS 10bn BoG loan to government was to support government in the fight against the pandemic.
According to the Finance Minister, the loan was necessary due to the adverse impact of the Covid-19 pandemic on the economy.
