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UPDATE 1-Ghana central bank funding budget deficit - bank governor
June 11, 2014 / 6:05 PM / 3 years ago

UPDATE 1-Ghana central bank funding budget deficit - bank governor

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ACCRA, June 11 (Reuters) - Ghana’s central bank is funding the country’s budget deficit but the amount does not exceed 10 percent of revenue and any excess will be made up by the end of 2014, governor Henry Kofi Wampah told Reuters in an interview.

“We know the government is about to issue a Eurobond soon which we can use to replace the financing we have made, so it’s not out of the ordinary or abnormal for us to provide the government’s financing needs at this time,” Wampah said.

Fitch ratings agency said on Monday that the bank was printing money to finance the deficit which could exacerbate the country’s fiscal problems and weaken the cedi currency.

Ghana faces a series of fiscal problems including a double-digit budget deficit for two years, a currency that has depreciated 28 percent this year, low import cover and high bond yields.

Those challenges are hurting the country’s reputation for stability and robust economic growth.

The bank’s import cover rose sharply to $5.1 billion, or 2.8 months of imports, as of June 6, Wampah said. But he declined to give a comparative figure.

Ghana is due to issue its third Eurobond in July. (Reporting by Kwasi Kpodo; Writing by Matthew Mpoke Bigg; Editing by Hugh Lawson)

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