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The Bank of Ghana (BoG) has defended its decision to finance the budget post-Covid-19, stating that not doing so would have resulted in economic collapse.
The Central Bank had a zero financing policy for the budget between 2015 and 2020, but this changed during the pandemic when the government struggled to generate enough revenue.
During a recent public lecture at the University of Ghana, Dr Philip Abradu-Otoo, the Director of Research at the Bank of Ghana, explained that the bank had to save the economy from collapsing.
The financing provided by the bank went mainly towards dealing with the domestic investors whose bonds had matured and who needed to be paid by the government.
Dr Abradu-Otoo added that the bank stepped in as a lender of last resort to protect the financial sector.
He also explained that all the financing provided by the bank was due to domestic bonds that had matured, and the bank intervened to save domestic investors.