In an effort to strengthen the independence of the central bank and address fiscal dominance, Ghana's International Monetary Fund (IMF) programme will include a revision of the Bank of Ghana Act.
The proposed amendments aim to introduce stricter limits on monetary financing, establish mechanisms for monitoring and enforcing compliance, and provide a clear definition of emergency situations in which the limits can be temporarily lifted.
As part of the prerequisites outlined by the IMF, the Bank of Ghana (BoG) and the Ministry of Finance have already signed a memorandum of understanding (MoU) to eliminate monetary financing during the programme, pending the necessary legislative changes.
Additionally, an ongoing updated Safeguards Assessment will offer further support in designing the revisions to the BoG Act. This assessment will examine the risks associated with the BoG's gold purchase and gold-for-oil programs.
Moreover, the restructuring of debt is expected to impact the balance sheet of the Bank of Ghana. To address this, the government and the BoG, with technical assistance from the IMF, will assess the implications and develop plans for the bank's recapitalization.
The IMF's report on Ghana's programme highlights the collaborative efforts between the government and the central bank to implement these measures and ensure the sound functioning of the financial system.
