IMF Warns Ghana Against Excessive Borrowing From Bank of Ghana Or Lose Out On $3 Billion Bailout
- Ghana's quest for an IMF bailout of $3 billion may be under threat as the Bretton Woods institution warns government against borrowing excessively from the Bank of Ghana
- The IMF has asked the two institutions to sign an accord on zero-financing, according to a Bloomberg report published on January 27
- The central bank has loaned the Nana Akufo-Addo administration some GHS40 billion
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It has emerged that the International Monetary Fund (IMF) has compelled the Bank of Ghana (BoG) and the Nana Akufo-Addo led government to sign an agreement aimed at ending the government's excessive borrowing from the central bank.
According to business news powerhouse Bloomberg, the IMF wants the two entities to sign a commitment to zero-financing.
Citing its confidential sources, the news organisation reported on Friday, January 27, 2023 that the agreement has become one of the conditions for the success of Ghana's desperate request for $3 billion to keep the economy in good health.
"The decision would bring a halt to central bank loans to the government that amount to about 40 billion cedis ($3.2 billion), according to one of the [confidential sources]," the report said.
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The agreement would also stop state-owned enterprises like the Ghana Cocoa Board, which owes about 7 billion cedis, from using more central bank financing.
An incident last week which involved withdrawal of maturities from the accounts of cocoa bills investors has been attributed to the warning on excessive borrowing by the IMF.
The BoG explained that an auction of cocoa bills worth 940 million cedis failed because it was severely undersubscribed and instead of buying the instruments as it used to do, it declined last week.
The cocoa bonds have since been rolled over on behalf of the investors, the BoG announced.
BoG explains why COCOBOD bills were withdrawn
Meanwhile, YEN.com.gh has reported in a previous story that the Bank of Ghana has said the maturities of investors in COCOBOD bonds will be rolled over.
The central bank has explained that the first six-month's cocoa bill that matured on Thursday, January 19, 2023, had a face value of GH¢940.42 million.
The BoG said that the bond was significantly undersubscribed, compelling stakeholders to take some drastic decisions.
The statement further announced that commercial banks, the BoG and COCOBOD have agreed that all institutional investors will roll over their maturing Cocoa bill.
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