The government of Ghana says it has been exploring various alternatives to the central bank financing of budget deficits which has been terminated through an agreement between it and the International Monetary Fund(IMF).
The Bank of Ghana (BoG) used to finance government's budget deficit which rose to as high as 11.8 percent in 2012 but, after the three years IMF Extended Credit Facility (ECF) Program for Ghana, the bank has this year begun a zero-financing of budget deficit.
Consequently, according to Minister for Finance Seth Terkper, government's strategy to manage the situation is to use money which has been lying idle in bank's accounts to fill the gap.
"One of the strategies is the earning of interests on Government's own idle funds in the banks. Following this, a number of Request for Proposals (RFPs) and stakeholder engagements have been held to implement this strategy," the minister told the media on Monday.
The minister was responding to allegations made by some political interests in Ghana that the government had been diverting certain funds, including the newly created Ghana Infrastructure Investment Fund (GIIF), as well as part of the 1.0 billion dollars Eurobond issued last year.
The minister asserted that rather than leaving state funds to lie idle in bank accounts, the government would rather invest them to earn profit for the tax payer.
Terkper denied the allegation that part of the 250 million dollars seed money to GIIF lodged by the Board with a Commercial Bank had been diverted into other uses, while rubbishing the claim that part of last year's Eurobond money had also been diverted.
The minister explained that the Eurobond which had a World Bank Guarantee for Ghana was specifically for debt substitution.
"It must be noted that Ghana now sources for some of its financing from the international capital market. The market has stringent rules and international law backing these transactions," the minister stated.
Deputy Minister for Finance Cassiel Ato Forson, who also attended the press briefing, stated clearly that the ministry's managing of finances was grounded in the provisions of the Financial Administration Act and also followed the convention already established over the years.