Economist and Finance Lecturer, Professor Godfred Bokpin says the Bank of Ghana cannot not be blamed for the recent free fall of the cedi.
According to him, managers of the fiscal policy must take the responsibility and up their game to keep the economy buoyant.
Speaking at a recent round table forum organised by the Institute of Economic Affairs, Professor Bokpin said fiscal policy has become a source of macroeconomic instability, thus undermining the effectiveness of monetary policy under inflation targeting.
“Whilst the depreciation of the cedi often times our minds go to Bank of Ghana; is not Bank of Ghana’s fault largely because fiscal policy has become the main source of macroeconomic instability, thus undermining the effectiveness of monetary policy – even under monetary policy, even under inflation targeting”.
“To that extent, what we are doing is more or less to pursue monetary policy as a subordinate to fiscal policy rather than it being complementary. And my own addition to the recent measures as alternative to going to the IMF, call that one natural medicine”, he added.
According to Bloomberg, the cedi lost 18.21% in value to the dollar in the first quarter of 2022. However, the situation may be better in the second quarter.
But Professor Bokpin wants an effective fiscal policy that will carry the monetary policy along to ensure a strong economic fundamental.
He advised the country to embrace a tax structure that is equitable and progressive, post COVID-19 economic recovery.
“We expect that given the effect of COVID-19, the country post COVID-19 economic reform must embrace a tax structure that is equitable and progressive and the reason the E-Levy must not be supported is because it is regressive”.
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