Senior lecturer at the Department of Economics at the University of Ghana, Prof. Ebo Turkson says the policies by the Monetary Policy Committee of the Bank of Ghana to bring inflation under control have been marred by government spending patterns and external pressures.
Although Prof. Turkson agrees that the MPC’s policies over the years have made notable progress, external shocks, high government spending as against low revenue, as well as structural defects of the economy are the major challenges preventing the Bank of Ghana from achieving the medium-term target of 8%+/-2.
“There is no doubt that the Central Bank through its Monetary Policy Committee has made notable progress in stabilizing inflation in recent years. But the journey in stabilization has been marred by significant hurdles that this Monetary Policy Committee has faced over the years, particularly from external and structural factors. If you take a look at over last 10 years, the MPC’s performance has been hampered greatly by external shocks, fiscal pressures and structural challenges that have made it difficult for the monetary policy framework to maintain low and stable inflation,” Prof. Turkson has noted.
To address this challenge, he suggests a more robust policy coordination where the monetary policies of the Bank of Ghana aimed at stabilizing and maintaining low levels of inflation are supported and complemented by government spending within its budget.
He insists that the mechanisms of monetary policies alone cannot drive the desired inflation levels hence fiscal policies that also address the structural problems of the economy can help to shield the economy from external shocks that negatively drive inflation.
“It is more important that the monetary policy is supported by More policy coordination from the fiscal side so that we can address the structural challenges we have in the economy and that is very critical for sustainable inflation going forward,” Prof. Ebo Turkson in an interview monitored by The High Street Journal.
Inflation, for many ordinary Ghanaians, is not just a theory but a reality since the persistent rise in inflation leads to an increase in the prices of goods and services. This translates into a high cost of living where individuals with low and stagnated incomes face increasing difficulty in affording necessities of life.
Prof. Ebo Turkson was appointed by the Central Bank to serve on the Monetary Policy Committee as an external member, in April 2022 following the end of the tenure of Dr. John Kwakye of the Institute of Economic Affairs.
