As Ghana emerges from its $3 billion IMF Extended Credit Facility and transitions to a non-financing Policy Coordination Instrument (PCI), the spotlight has turned sharply toward the Bank of Ghana (BoG).
With a historic GH¢60.8 billion loss in 2022 and a balance sheet struggling with negative equity, the central bank’s ability to act as a neutral economic referee has come under scrutiny.
Amid this conversation, Banking and finance consultant Dr. Richmond Atuahene argues that for Ghana to achieve lasting stability, the BoG’s “paper independence” must become a practical reality through radical structural reforms.
He therefore makes strategic recommendations to enhance the independence of the Central Bank to drive a sustainable and resilient economic growth.
Building a Debt Brake into the Constitution
One of Dr. Atuahene’s most urgent recommendations is to move beyond mere legislation and amend the 1992 Constitution to include a strict “debt brake.”
Currently, the Bank of Ghana (Amendment) Act 2016 sets a 5% limit on government borrowing, yet this was breached in 2022 when the BoG financed over 50% of the budget deficit.
Dr. Atuahene proposes mirroring the German model, where a debt brake is enshrined in the national constitution, making it nearly impossible for politicians to use their parliamentary majority to bypass spending caps.
Practically, this would stop the printing of money to cover revenue shortfalls, a practice that historically fueled hyperinflation in Ghana.
Ending the “Hire and Fire” Cycle
To safeguard the bank from political whims, Dr. Atuahene recommends extending the tenure of the Governor and Board to a fixed, non-renewable period of five to ten years.
Currently, four-year terms often coincide with election cycles, leading to voluntary or forced resignations whenever a new government takes office.
By making these terms non-coterminous with the presidency, the BoG leadership would no longer fear dismissal for making unpopular but necessary decisions, such as raising interest rates during an election year.
Furthermore, he suggests that the nomination and confirmation of the Governor be handled by separate bodies to ensure a technical, rather than political, selection process.
The Great Debate: Total Independence vs. Economic Coordination
However, the path to total autonomy is not without debate. A significant school of thought, one acknowledged even by Dr. Atuahene, suggests that central banks should not operate in total isolation.
Globally, central banks often coordinate with governments to ensure that monetary policy (interest rates) and fiscal policy (government spending) do not work at cross-purposes. Among economists, there is a debate over whether it is out of place for central banks to support direct lending to priority sectors when market imperfections exist.
Even former Federal Reserve Chair Ben Bernanke noted that the principle of independence does not preclude coordination during specific economic crises. The challenge, then, is finding the “sweet spot” where the BoG can support government growth objectives without compromising its primary mandate of price stability.
Integrity as the Final Frontier
Beyond laws and tenures, Dr. Atuahene emphasizes that strength comes from internal integrity. He points to the 2017–2019 financial sector clean-up as a failure of supervision, where regulatory forbearances and insider lending were allowed to fester due to political and commercial pressures.
His recommendation is that the BoG must implement strict conflict-of-interest codes and internal investigative units. By acting as an objective market gatekeeper, the bank can prevent the “governance rot” that led to costly taxpayer-funded bailouts in the past.
The Bottomline
For Dr. Atuahene, the post-IMF era is a window of opportunity. By enshrining fiscal limits in the constitution, protecting leadership from political cycles, and enforcing rigorous ethical standards, Ghana can transform the Bank of Ghana into a fortress of stability
While coordination with the state remains a global reality, Dr. Atuahene’s insights suggest that true economic growth can only flourish when the central bank has the power to say “no” to the government when the nation’s long-term health is at stake.
