Dr. Maxwell Opoku-Afari, First Deputy Governor of the Bank of Ghana, has underscored that the major concern for the government is determining the ideal time to without its policy supports to businesses and households in the country. According to him, this needs to be done tactfully so as not to derail the gains that the government has made as a result of its policy interventions to combat the effects of the pandemic in the country.

“A key issue going forward relates to the timing of withdrawal of policy support. This would need to be carefully done so as not to jeopardise the recovery process and the Bank will continue to monitor development and take appropriate decision”.

Speaking at the Journalists for Business Advocacy (JBA) financial literacy training workshop on July 9, Dr Opoku-Afari highlighted that Ghana’s economy is entering a new phase of its macroeconomic developments with low inflation and well-anchored expectations.

As a result, he stated that a careful balancing act in unwinding the policy support would be needed by policy makers to ensure that stability in a post-pandemic environment is guaranteed. He further stated thatthe signs of recovery are encouraging and would require careful monitoring and continuous comprehensive macroeconomic policies, where necessary. Defining a feasible fiscal adjustment path in the medium term to ensure fiscal and debt sustainability to anchor macroeconomic stability, he said, is key.

An important lesson from the pandemic

According to the Deputy Governor, an important lesson from the pandemic is that it has quickened the drive towards a cash-lite economy. This, he believes, “is likely to shape monetary policies going forward”. He further explained that the widespread use of mobile money was given an added boost when the Ghana Interbank Payments and Settlement Systems (GhIPSS) introduced the national Quick Response (QR) Code payment solution last year to simplify merchant payments and reduce the use of cash.

Dr. Opoku-Afari highlighted that the QR Code has since been made available to banks and payment service providers, as well as small and medium-sized enterprises to enhance business transactions.

Also, he noted that leveraging on financial innovations, the Bank of Ghana has also initiated processes for a pilot Central Bank Digital Currency (CBDC). He explained that this will further move the economy towards a cash-lite environment.

“We anticipate that the Bank’s CBDC project would further advance financial inclusion, promote the efficiency and stability of the payment system, and foster competition in the financial sector”.

Transparency is crucial under inflation targeting regime

Furthermore, he indicated that as a regulator, BoG believes that under the current inflation targeting regime, transparency is crucial in fostering credibility of the central bank’s policies.

Meanwhile, the Deputy Governor urged the financial journalists to play a key role in disseminating “our policies to support the recovery process”. Adding that, “how well this is done will tend to engender confidence in the financial markets and propagation of monetary policy impulses”.

In conclusion, Dr. Opoku-Afari assured that the central bank will continue to implement policies consistent with its inflation targeting framework to entrench the current low inflation environment.