The Bank of Ghana has decided to support the budget of the government with GHS10 billion against the economic shocks caused by the COVID-19 pandemic, which has, so far killed 24 out of the 5,530 confirmed cases in the country.
At its Monetary Policy Committee meeting at which it announced the maintenance of the policy rate at 14.5 per cent, the regulator said: “The COVID-19 pandemic has put a severe strain on the budget, manifesting in petroleum revenue shortfalls as a result of plunging crude oil prices, shortfalls in import duties, other tax revenues, and non-tax revenues”.
“Preliminary assessments”, Governor Dr Ernest Addison noted, “show that the financing gap that was estimated at the time of applying for the IMF RCF in March has widened significantly, resulting in a large residual financing gap”.
Dr Addison said: “Current market conditions in the wake of the pandemic, will not allow the financing of the gap from the domestic debt capital markets without significantly increasing interest rates”.
“Under the circumstances and in line with section 30 of the Bank of Ghana Act, 2002 (Act 612) as amended, the Bank of Ghana has triggered the emergency financing provisions, which permits the Bank to increase the limit of BoG’s purchases of government securities in the event of any emergency to help finance the residual financing gap.
“Today, under the Bank of Ghana’s Asset Purchase Programme, the Bank has purchased a Government of Ghana COVID-19 relief bond with a face value of GHS5.5 billion at the Monetary Policy Rate with a 10-year tenor and a 7 moratorium of two (2) years (principal and interest).
“The Bank stands ready to continue with its Asset Purchase Programme up to GHS10 billion in line with the current estimates of the financing gap from the COVID-19 pandemic”, Dr Addison said.