Debt financing, expenditure are key risks to liquidity, exchange rate – BoG
Speaking at the opening of the 132nd MPC meeting, Dr Asiama said an increase in government spending could lead to a higher share of short-term domestic debt.
The Bank of Ghana has highlighted government spending and debt financing as significant fiscal risks that could impact liquidity and the exchange rate. Governor Dr Johnson Asiama stated that the Monetary Policy Committee will closely monitor how fiscal developments in 2026 interact with monetary policy. Rising government spending may lead to a higher proportion of short-term domestic debt, potentially affecting liquidity conditions in the economy.
The completion of Ghana's external debt restructuring could also increase debt-service obligations, further influencing liquidity and the exchange rate. The Monetary Policy Committee's deliberations will focus on three key issues: fiscal developments, rising inflation, and challenges to Ghana's external position, including lower reserves and a decline in gold shipments.
The Committee is also evaluating whether the current 14% policy rate remains suitable for anchoring inflation expectations amidst these changing conditions.
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