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 flagged government spending and debt financing as key risks to liquidity and the exchange rate. Governor Dr Johnson Asiama stated that the Monetary Policy Committee will closely monitor the fiscal developments' impact on monetary policy in 2026. An increase in government spending could lead to a higher proportion of short-term domestic debt, affecting liquidity conditions.
The completion of Ghana's external debt restructuring may increase debt-service obligations, which would also have implications for liquidity and the exchange rate. The MPC's deliberations will focus on three key issues: fiscal developments, rising inflation, and pressures on Ghana's external position, including declining reserves and reduced gold shipments.
The current 14% policy rate's appropriateness in anchoring inflation expectations amid these developments is under consideration.
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