BoG, Finance Ministry teamwork driving inflation down – Economist
Development Economist Dr Felix Larry Essilfie has lauded the effective collaboration between the Bank of Ghana and the Ministry of Finance for successfully steering the Ghanaian economy back on track, resulting in a steady decline in inflation.
He emphasised the crucial partnership between fiscal policy, managed by the Finance Ministry, and monetary policy, overseen by the Bank of Ghana, as the driving force behind recent economic improvements.
Speaking on Focus on Zed FM, Dr Essilfie noted that a critical step taken by the government to stabilise the economy was the Finance Minister’s first policy priority of streamlining government expenditure and forging collaboration with the Bank of Ghana.
“A key qualitative factor is the collaboration between the fiscal side and the monetary side. This collaborative effort has helped a lot,” he noted.
Dr Essilfie highlighted the emphasis on fiscal consolidation, particularly expenditure-based consolidation, by cutting waste and focusing spending on areas beneficial in the medium and long term for the people.
To improve government revenue, the Finance Ministry leveraged technology fully. “Before you can get a tax clearance certificate, you need to clear your arrears first,” he said, adding that the online government payment platform has helped reduce revenue leakages.
Dr Essilfie also pointed to public financial management reforms ensuring no ministry can award contracts without clearance from the Finance Ministry, fostering greater accountability. Some ministers are not happy about this, but it is the best way to ensure discipline.
On the monetary side, the Development Economist indicated that the Bank of Ghana maintained a cautious approach to borrowing and interest rates and has engaged in sterilisation to remove excess liquidity from the market, curbing inflationary pressures caused by excess money chasing limited goods. Dr Essilfie concluded that, should Ghana remain disciplined moving forward, inflation could reach about 5.5 to 5.7 per cent.
