Prioritise sustainable policies beyond IMF programme — Economist to BoG

The measures, the professor of finance at the University of Ghana, said, should transcend the implementation of the current US$3 billion loan-support programme with the International Monetary Fund (IMF).

That, he said, would ensure a long-term sustainability of the Cedi from free fall against its major trading currency, the Dollar, and keep inflation within a band that would spur economic growth and stability.

His recommendation follows the recent appreciable containment of the depreciation of the Cedi against its major trading currency, the Dollar, and taming of inflation.

In an interview Prof Bokpin lauded the Central Bank for its role in the country’s economic recovery, but noted that the macroeconomic gains being witnessed so far was not strong.

Prior to securing the IMF loan-support programme, Ghana’s inflation stood at 54.1 per cent in December 2022, but reduced to 23.2 per cent in December 2023, before increasing to 25.8 per cent as of March 2024.

The Cedi February 2023 had seen a cumulative depreciation of nine per cent between February and December 2023, President Nana Addo Dankwa Akufo-Addo said during the presentation of the 2024 State of the Nation in February.

However, Prof Bokpin said, the time had come for the Central Bank to have a deep reflection, and begin to fashion out a medium-to-long-term strategy that ensured macroeconomic credibility and trust beyond an IMF programme.

“The gains made so far is quite fragile, so we must work hard to consolidate it beyond the expiration of the IMF programme by being disciplined and efficient with our expenditure as we’re in an election year,” he recommended.

Prof Bokpin also called for structural reforms that would guarantee the independence of the Central Bank, citing cases where the Bank opposed some government decisions, yet it had to succumb to government pressure.

“From the COVID-19 pandemic era, the pronouncement of the Governor showed signals to the market that he was not happy with the way the fiscal side was intruding into the monetary side of the economy, but he succumbed to that political cannibalisation,” he said.

He also stated that the Central Bank expressed a strong disapproval of the haircut under the Domestic Debt Exchange Programme (DDEP) and fought against it during the 2023 spring meetings.

Nonetheless, the Bank had no choice than to sacrifice its balance sheet, leading to the BoG suffering a 50 per cent haircut on government’s debt, something the Bank said it did “to save the economy from collapsing”.

“The Central Bank must be bold in saying that the fiscal side is messing us up; when they admit and speak truth to power, without fearing that they’ll be fired, this country will begin to have a turn for good,” Prof Bokpin said.