After the International Monetary Fund (IMF) approval of Ghana’s economic assistance program, the Central Bank Act is expected to be amended as part of attempts to improve independence and alleviate fiscal dominance.
This was contained in a country report issued by the Fund on May 17, 2023.
The amendments to the Bank of Ghana Act will feature a stricter limit for monetary financing, mechanisms to monitor and enforce compliance, and offer clear definition of emergency situations under which the limit can be temporarily lifted.
Before Ghana secured approval from the IMF Executive Board for a $3 billion bailout, the Bank of Ghana and Ministry of Finance, as part of prior actions, signed memorandum of understanding (MoU) to end monetary financing during the programme.
Under the new programme, there is an ongoing updated Safeguards Assessment which is aimed at proving additional support for designing changes to the BoG Act and pending some legislative amendment.
The Act, when revised, will further review the Central Bank’s Domestic Gold Purchase and Gold-for-Oil programmes amid associated risks for the Bank of Ghana.
Under the IMF programme, the Bank of Ghana’s balance sheet is expected to be affected by the debt restructuring exercise.
The IMF country report on Ghana’s IMF bailout noted that government and the Central Bank would have to assess the potential impact and develop strategies towards its recapitalization with the Fund technical assistance support.