A Professor of Finance and Economics at the University of Ghana Business School (UGBS), Godfred Alufar Bokpin, has said the factors available to administrators of the Bank of Ghana (BoG) should have led to a better performance compared to the previous years.
Referring to a presentation made by Vice President Mahamudu Bawumia, then a running mate to candidate Akufo-Addo, on restoring the value of the Cedi, he said the Veep’s position on deposit financing as clearly stated should have guided the current regime’s policies to arrive at better results regarding the value of the cedi and the country’s fiscal policies.
However, the result has been worse compared to previous years.
“…At that time the bank of Ghana Act stipulated a deficit financing of 10% government’s previous year’s fiscal revenue. According to the data the Vice President then put forward, the deficit financing was in excess of about 36% in 2013 and then 45% in 2012. Now when we work to the safety concern in 2014 , one of the things that was identified was the deposit financing because it’s very clear once you do the monetization of the public debt the unexpected inflational pressures will no longer be unexpected.
“In this current regime, my considered view is that, with the level of expertise and knowledge and understanding of our economy and the role the central bank has played, one would have expected that this current government would do far better, but it’s actually been made worse,” he indicated.
He said that was the reason Parliament gave a cap due to the excessive financing which posses a threat to the economy.
“Then it was 10%. The 16th IMF supported program that kick in from April 10th 2015 to April 2019, clearly identified the fiscal dominance of monetary policy is the same thing just the technology we are changing. The fiscal dominance of monetary policy was one of the tenth drivers of the macro economic instability. What was the IMF’s response to zero financing of the deposit? None of the program objectives of that IMF supported programme was elimination of the fiscal dominance of monetary policy. I’m saying this so that we understand that as a country we don’t learn the lessons. The abuse only gets worse and worse. Ghana has no future if it continues like this,” he cautioned.
Prof. Bokpin was speaking on the crises befalling the Bank of Ghana on the KeyPoints Saturday, October 7, 2023, with Alfred Ocansey on TV3.
