* Central bank says on target to meet 2017 inflation target
* New central bank governor says will pursue price stability
By Kwasi Kpodo
WASHINGTON, April 21 Ghana's central bank will
not finance the government's budget, its new governor, Ernest
Addison, said on Friday as the regulator seeks to keep fiscal
consolidation on track.
Ghanaian lawmakers last year passed a law allowing the
central bank to finance the deficit up to 5 percent of the
previous year's tax revenues, breaching terms of a $918 million
aid deal with the International Monetary Fund which demanded
that such funding be eliminated.
The major commodities exporter signed the three-year deal in
April 2015 to restore fiscal balance to an economy dogged by
high deficits, widening public debt and inflation.
Addison said Bank of Ghana did not finance the deficit last
year, although the current law allows limited funding.
"We are staying on course... we do not expect that we’d have
a situation where the government will come for financing from
the central bank," he told reporters in Washington on the
sidelines of this year's IMF Spring meetings.
The government of President Nana Akufo-Addo, inaugurated in
January, has outlined plans to restore fiscal balance, spur
growth and create jobs driven by the private sector.
Addison, who assumed office this month, said he would pursue
price stability and ensure the alignment of central bank's
policy rate with interbank rates by adopting a better
"We think that inflation-targeting has worked for Ghana.
It’s effective and once the appropriate conditions are in place,
we expect that the framework will provide the guidance for us
to implement our monetary policy objectives," said Addison who
previously worked as chief economist at the African Development
The central bank is on track to meet its 2017 inflation
target of 11.2 percent towards the government's medium-term
vision of single digit inflation at 8 percent plus or minus 2
percent spanning 2018-19, he added.
Addison said he expects Ghana's cedi to sustain its
recent stability against the dollar, supported by the government
fiscal policy, improvement in export earnings and reduction in
He said Bank of Ghana had written to some troubled
commercial banks that defaulted on loans from the central bank
and asked them to recapitalise.
"We are waiting to look at the recapitalisation plans. It
has to be credible and we’re hoping that in the next few weeks
... some decisions will have to be taken," he said without
(Reporting by Kwasi Kpodo; Editing by Cynthia Osterman)