Post-COVID financing decisions were to save the economy from collapsing – BoG

The Director of Research at the Bank of Ghana, Dr. Philip Abradu-Otoo, has stated that the financing measures that the Central Bank adopted in 2022 were to save the economy from collapse.

According to him, the bank had to take the initiatives to protect the economy instead of only strictly sticking to issues of fiscal dominance.

He also noted that a chunk of the financing decisions they made went to investors.

“So, from the Central Bank’s point of view, we realized we needed an economy to protect. So, there were choices that had to be made, should we allow the economy to collapse or we should stick strictly to issues of fiscal dominance, and then who picks up the pieces after the economy has collapsed?

“But that financing that we did in 2022 went mainly to deal with investors; domestic investors whose bonds had matured and the government needed to pay these bonds and for which government had no resources,” he was quoted by myjoyonline.

Philip Abradu-Otoo also noted that the decisions were equally to save domestic investors as well.

“Hundred percent of that amount [BoG financing] was due to domestic bonds that had matured for which we had to step in to save these domestic investors. And that is where this fiscal dominance issue came in.

“So yes, it came in but we did that to save domestic investors,” he concluded.

SSD/FNOQ