The Bank of Ghana has flagged fiscal risks arising from government spending and debt financing, warning that developments in both areas could affect liquidity and the exchange rate during the remainder of 2026.
Governor Dr Johnson Asiama raised the concerns at the opening of the 132nd Monetary Policy Committee (MPC) meeting, where officials are assessing emerging threats to price and financial stability.
He said the Committee would examine how the government’s fiscal decisions interact with monetary policy, particularly as spending pressures and debt obligations evolve.
Short-Term Borrowing Under Scrutiny
Dr Asiama cautioned that increased public expenditure could lead to greater reliance on short-term domestic borrowing.
“If spending is to rise, the share of short-term domestic debt could also rise,” he said.
Such a development could influence liquidity conditions as the government raises funds and meets repayment obligations.
The Governor also identified Ghana’s external debt restructuring as an important consideration for the Committee.
“Completion of the external debt restructuring could raise debt service obligations,” he said, noting that the resulting payments could have implications for liquidity and the exchange rate.
Inflation and External Pressures Add to MPC Concerns
Fiscal developments are one of three major issues guiding the latest MPC deliberations.
The Committee is also assessing the recent rise in inflation and pressures on Ghana’s external position, including declining reserves and slower gold shipments.
Together, these developments raise questions about how much room the central bank has to support economic activity while maintaining price and exchange-rate stability.
The MPC must weigh those risks against prevailing monetary conditions before determining its next policy stance.
The Bank of Ghana has scheduled its decision announcement for Thursday, September 24.
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