Economist and Professor of Finance, Godfred Alufar Bokpin, has advised the Bank of Ghana to reposition itself to support the productive aspects of the economy, rather than merely mopping up liquidity when necessary.
He urged the central bank to intervene in government decisions and actions to mitigate the harsh economic effects of exchange rate fluctuations.
Citing the BOG's decision to print GHc77 billion in 2022 to cushion the government, Professor Bokpin noted that the central bank could support the government in the productive sectors of the economy.
In an exclusive interview with the Graphic Business, Professor Bokpin emphasized the need for the BOG to shift its focus from solely containing inflation to supporting the enhancement of the economy's productive capacity.
Advertisement
According to Prof. Bokpin, the persistent foreign exchange conundrum plaguing the economy is primarily caused by supply shortages rather than excess demand.
He argued that by investing in the productive sectors of the economy, the central bank can effectively address this issue.
He called on the incoming Governor of the Bank of Ghana (BoG), Dr Johnson Asiama to revolutionise the central bank's approach to monetary policy.
“The BOG can help finance an increase in the country’s agriculture productivity and competitiveness by financing the adoption of modern farming techniques, improving irrigation and more,” he stated.
Enhancing productive capacity
To move the economy from taxation to production, Professor Bokpin emphasized that the general productive capacity of the economy must be enhanced.
He stated that the central bank has a vital role to play in this regard, adding that dwelling solely on fiscal policies has not benefited the economy or the country.
“The Central Bank must imbibe a new structure and form, it must be more involving in tackling the current economic malaise bedevilling us,” he stated.
Operational costs and anti-corruption
Professor Bokpin also charged the incoming governor to scale down the operational costs of the bank, which he described as excessive. He warned that failure to do so would lead to the monetisation of every infraction in the economy.
Furthermore, Professor Bokpin called on the BoG to collaborate with financial intelligence units, including the Economic and Organised Crime Office (EOCO) to combat corruption and fraud. He revealed that there are serious weaknesses in the banking and financial sector, which the incoming governor must address.
The way forward
As the incoming governor prepares to take the reins, Professor Bokpin's expert advice offers a roadmap for reform.
By reorienting the central bank's approach to monetary policy, scaling down operational costs and tackling corruption, the BoG can play a more effective role in supporting the economy's productive sectors.
As the nation looks to the future, it is clear that a new path for the Bank of Ghana is not only necessary but also urgent. Will Dr Asiama take up the challenge and lead the central bank towards a more productive and prosperous future? Only time will tell.
Ghana's struggles with inflation
The country's inflation rate has been volatile, influenced by factors such as food prices, exchange rates and global economic trends. In 2022, inflation peaked at 54.1% and although it has decreased, it remains a challenge, standing at 23.8% as of January 2025.
Food inflation has been a major hurdle for successive governments as fluctuations in food prices, driven by local production issues and global supply chain disruptions have had a significant impact.
Added to this is a weakening cedi that increases the price of imported goods, contributing to inflation which has been exacerbated by global economic trends and events such as the COVID-19 pandemic and Russia's war in Ukraine, leading to external shocks affecting Ghana's economy.
Tackling Inflation
Subsequently, to tackle inflation, the Bank of Ghana has been implementing a very tight and strict monetary policies, including increasing interest rates to 27% to curb inflation.
Coupled with this, the government has endeavoured to maintain fiscal discipline, ensuring that spending is aligned with revenue generation to avoid exacerbating inflation.
Some financial and economic experts have also called for structural reforms in our economy to improve the business environment, enhance domestic resource mobilisation and strengthen public financial management can help reduce inflation.
The need to reduce dependence on imports, particularly for essential goods can help mitigate the impact of exchange rate fluctuations on inflation according to some experts.