Banking Consultant, Richard Atuahene, has called on the government to cut its expenditure to save the Central Bank from its insolvency.

Ghana’s government has written off half of the 77.6 billion cedis which is equivalent to $7 billion it owed to the Central Bank and replaced the remainder with a lower yielding, 15-year bond, three sources with direct knowledge of the transaction told Reuters.

The latest move is part of the West African nation’s push to restructure its domestic debt – a requirement to qualify for the next tranche of a $3 billion International Monetary Fund (IMF) rescue loan.

Ghana now wants to focus on negotiations with external creditors.

Speaking on Morning Starr with Francis Abban, Mr. Richard Atuahene indicated that the challenges could be on the way and a target used in the debt restructuring programme carried out by the government.

“The government may have to cut its expenditure, cut the expenditure to the bareless minimum. So that it can use some of the fiscal gains to support the Central Bank. That is what is required. Now we have to look at the fiscal policy side. Because you need to recapitalize it," he said.

“You can only do that when your settlers on the other side are able to, because now the IMF is saying that you cannot refinance the government. If it was earlier they possibly could have refinanced it and that will have been. Now they are saying that zero financing and refinancing means that we will have to do our fiscal mathematics very well."

He continued: “So that we can get taxes or something to help the Bank of Ghana come to its position and function like a real Central Bank.”