Need to rebuild the economy – role of Central Bank
Economic growth does not come by chance but through deliberate and systematic implementation of sound economic programmes that help to bring about the desired economic results.
Ghana’s economy had problems in recent times and as of 2016, the economy was not in a very good shape. For this reason, the beginning of 2017 saw the implementation of programmes and policies by the Akufo-Addo administration aimed at arresting the economic decline, restore confidence and propel some growth as a way of improving upon the welfare of the people.
ECONOMIC PROGRAMMES AND POLICIES
In fact, 2017 went very well. As a result, economic programmes and policies put in place began to yield results.
The years 2018 and 2019 also went well and by the end of 2019, the economy had begun to take a strong shape to the admiration of many Ghanaians and external observers many of whom praised the country for a good work done.
SUPPORT BY CENTRAL
In all this, the Central Bank had to lend relevant support to the government to encourage it to achieve its aim. This means that the Bank of Ghana has a crucial role to play to normalise economic conditions and ensure that there is effective growth in the economy.
If this is the case, then what role has the Bank of Ghana played so far to help the government realise its ultimate goal of economic growth in the Ghanaian economy?
SOUND ECONOMIC POLICIES
The year 2019 ended with some positive results as a result of sound economic policies being implemented by the Akufo-Addo administration. Some of the positive results are a decline in the rate of inflation and robust build-up of International reserves of the Central Bank.
If inflation keeps rising, the value of the currency would be thrown out of gear and as a result economic management would become difficult to carry out. Thus, the decline in the rate of inflation poses a good opportunity for the country to rebuild its economic system and forge ahead towards the realisation of its economic goals.
Similarly, the building up of International reserves by the Central Bank was positive since it helped to strengthen the economy. Without International reserves, the least disturbance in the economy would throw things out of gear and the country may find it difficult to support itself over a period of time.
The implication here is that increase in International reserves at the Central Bank tells the Bank of Ghana to support economic programmes over a higher period than would usually be the case if international reserves are depleted.
It is equally important to note that all these methods help to establish stability in the rate of exchange. Stability in the exchange rate helps to strengthen the economy and enables the country to withstand pressures from external sources.
As the country was cruising along appropriate and desirable economic path due to sound economic programmes by the government and rigidly supported by the Bank of Ghana, the world was struck all of sudden by the COVID-19 pandemic. The pandemic affected all countries including Ghana.
The impact of COVID-19 was tremendous. To begin with, it affected commodity prices. Secondly, tourism and International capital flow were also affected.
FIGHTING FOR FINANCIAL INTEGRITY
To be able to withstand these pressures, there was the need for the Bank of Ghana, under the governorship of Dr. Ernest Addison to fight hard towards maintaining financial integrity. In addition, there was the need for tremendous financial and economic growth. The period saw increase in mobile money transaction.
As a result of all these, the country began to experience confidence in financial sector earnings, liquidity and capital adequacy all indicating significant improvement of economic trends in the country.
The Bank of Ghana need not rest on its oars. This means that it must exert constant regulatory and policy attention to mitigate any risk that may arise. The quality of the governorship of Dr. Ernest Addison is good because he is ensuring the implementation of policies that are likely to ward off any weak economic segment that may be seen in the financial sector.
GOVERNORSHIP OF DR ADDISON
It is under the governorship of Dr. Addison that the Bank of Ghana was able to identify any weaknesses in the banking sector and take drastic measures to overturn the non-performance of some of the banks leading to the revocation of licences.
The weak banks exhibited symptoms such as “poor asset quality, lack of profitability, loss of capital, excessive leverage, excessive risk exposure, poor conduct and liquidity concerns” as stated by Dr Addison in the 2020 annual dinner of the Chartered Institute of Bankers held at the Accra International Conference Centre on November 28, 2020.
All these indicate that without the role of the governor of the Bank of Ghana and his officers, the programme of the government would not be able to achieve its purpose.
If this is the case, then Dr. Addison needs to be highly commended together with his hardworking team so that they will always be encouraged to come out with good programmes and policies to keep matters going as expected.
By Dr Kofi Amponsah-Bediako