Ghana - IMF finance deal under threat after lawmakers amend bill

Ghana’s parliament overwhelmingly rejected a core condition of a $1Billion International Monetary Fund (IMF) aid deal on Tuesday, breaching the terms of a three-year programme meant to fix an economy dogged by high public debt.

The lawmakers passed the Bank of Ghana (BoG) Amendment Bill to allow central bank financing of the government’s budget deficit up to a ceiling of 5 percent of the previous year’s total revenue, instead of the zero financing demanded by the IMF.

Existing law allows the central bank to finance the deficit up to 10 percent but the IMF wants the funding eliminated, a condition the government must fulfil for it to conclude Ghana’s third programme review and disburse the next tranche of aid.

An IMF spokesperson said late Tuesday that the fund would assess and discuss with the government the possible implications of the decision by the lawmakers to allow central bank financing.

The west African nation struck a deal with the IMF aimed at stabilising its troubled economy caused by a widening budget deficit.