Some Members of Parliament (MPs) are seeking further clarity on government’s decision to cap the financing of the country’s budget deficit from the Bank of Ghana, at 5 percent.
They argue that the move is not in the best interest of the state as it is in sharp contrast to the 10 percent cap for other countries in the West African Monetary Zone.
The concerns were raised as the Bill went through a second reading on the floor of the House on Wednesday evening.
A Member of Parliament’s Finance Committee, Dr. Mark Assibey Yeboah doubted the effectiveness of the decision saying borrowing from commercial banks to finance deficits is likely to attract higher interest rates compared to central bank.
“If the government intends to run a deficit and we pass appropriations in the House, where there is a deficit component, it will be going around borrowing. Once it is not able to borrow from the central bank and there is a deficit to finance, the government will go around borrowing from
commercial banks and even from the European market,” he observed.
The Obuasi West MP further insisted that the decision to get the Bill passed by Parliament formed part of the conditions for the three year 918 million dollars economic assistance program agreed on by Ghana and the IMF.
But Chairman of the Finance Committee, James Klutse Avedzi maintains even though the IMF suggested to Ghana for the central bank’s regulations to be revised to facilitate some fiscal and economic decisions, the processes so far have been initiated and undertaken by government.
“The committee looked at the concerns and it considered that even though the IMF made the recommendations to government, government is not being forced by the IMF to undertake this decision and the Minister of Finance is moving the Bill on behalf of government,” James Avedzi explained.
Meanwhile NDC MP for Madina and the Chairman of the Mines and Energy Committee, Ahmadu Sorogo argued that the Bill is premature and urged further scrutiny.
Citi News’ Duke Mensah Opoku who sat through the deliberations also reported that the Bill appears not to be receiving much popularity among the MPs.
The Bill has however been forwarded for consideration after which it will be brought for a third reading and subsequently passed.
In a related development, requests by the Finance Minister to get the Public Financial Management Bill has been met with opposition from Minority of the House who strongly believe the IMF is backing the agenda to get the Bill passed.
Parliament is however expected to rise on Friday, July 29, 2016.