The Ghana Union of Traders’ Association (GUTA) has blamed the Bank of Ghana for failing to find a viable solution to the worsening inflation situation.
According to the President of GUTA, Dr. Jospeh Obeng, the Bank of Ghana’s resort to hiking monetary policy rate has exacerbated an already harsh economic environment and has rather worsened the inflation situation it was meant to address.
Speaking on PM Express on the effects of the policy rate increment, Dr. Joseph Obeng indicated that the policy rate hike is only benefitting banks and not the general public who are bearing the brunt of the economic hardship.
“The Bank of Ghana is not helping; as a matter of fact, they’ve failed us because all these indicators are under the [care] of Bank of Ghana. Exchange rate, they have to manage it, and they’re not managing it even though we’ve given so many clues as to what to do.
“Maybe out of connivance or whatever, they’re unable to do that. So, foreign exchange is not well managed and then, you keep on increasing the monetary rate forgetting that your inability to manage the forex is what is fueling the inflation.”
Dr. Jospeh Obeng
Dr. Joseph Obeng explained that the recent hike in monetary policy rate by 250 basis point to 24.5% has significantly affected the cost of duties and other taxes at the port due to the fact that they are pegged against the exchange rate.
Blame Government not Bank of Ghana
Contrary to GUTA’s stance, Ranking Member on Parliament’s Trades Committee, Hon. Murtala Mohammed, said the Bank of Ghana cannot be blamed for the harsh economic situation in the country but the blame should be laid at the doorstep of government.
Also speaking on PM Express, Hon. Murtala explained that even though some policy measures rollout by the Bank of Ghana may have amplified an already dire situation, it should not be overlooked that the Central Bank is not entirely independent of the Executive arm of government.
“I’ve listened to my good friends there and they all seem to be blaming the Bank of Ghana, it is the government who should be blamed; the President, the Vice President and the Minister for Finance for abysmally, disastrously managing this economy. They are those who should be blamed.
“So, I’m not surprised that they’re saying that when they go to the Bank of Ghana, the Bank of Ghana blames the Ministry of Finance; they go to the Ministry of Finance, the Ministry of Finance blames the Bank of Ghana. It will be the height of naivety to assume that the Bank of Ghana is absolutely independent of the Executive. All the economic policy decisions for which reason we’re in the mess are occasioned by the policies of this government.”
Hon. Murtala Mohammed
Hon. Murtala Mohammed noted that the government has failed to control the country’s penchant for relying on importation of goods, some of which could be produced in large quantities locally.
The Ranking Member on Parliament’s Trades Committee further noted that the failure of the government to enforce the strict importation restrictions that the erstwhile Mahama administration left behind has driven imports at an all-time high and thus, puts even more pressure on the cedi.
“We are spending over 2billion dollars annually importing [rice and poultry products] into this country. Just in 2016, we were spending about 500million dollars importing same. So, if you’re spending over 2billion dollars on the importation of rice and poultry products within a year, what it simply means is that every year, you need to look around to get the over 2billion dollars to import those products into your country.
“You don’t buy them with cedis. Now, if you’re taking 2billion dollars every year, it certainly will exert pressure on your domestic currency and that is the problem.”
Hon. Murtala Mohammed
Hon. Murtala Mohammed therefore advised the government to revisit some of its policy interventions to stall the further depreciation of the cedi.
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