Ranking Member on the Finance Committee of Parliament has criticised the country’s Monetary Policy Committee following World Bank’s comment that the Bank of Ghana delayed in increasing the policy rate.

Speaking in an interview on Joy FM’s Top Story on Wednesday, Dr. Cassiel Ato Forson said the country’s Monetary Policy Committee has been 'lazy'.

According to him, the Monetary Policy Committee has also not been “forthcoming with actions they have to take” with regard to salvaging the economic crisis.

This is in line with the World Bank expressing concern about the delayed policy rate hike by the Bank of Ghana (BoG) during the period of surging global food prices and inflation.

“By contrast, in Ghana, the Central Bank delayed interest rate hikes until inflation soared from 13.9% in January 2022 to 19.4% in March, followed by a massive depreciation of the cedi. Then, the monetary policy authority reacted aggressively with two consecutive rate hikes of 250 and 200 basis points in March [2022] and May [2022], respectively”, the World Bank pointed out in its October 2022 Africa Pulse Report.

“These marked rate increases proved to be insufficient in curbing rising prices as inflation reached an all-time high of 33.9% in August [2022]”, it added.

Dr. Ato Forson agreed that the Monetary Policy Committee has been “very reactive.”

“Why would you conduct a Monetary Policy Committee meeting, fail to hike rate when everybody is pointing to a possibility of hiking rate where anyone, even other people who are not monetarists will tell you that there is the need to hike the rate and deal with the inflation as early as possible.

"You decide not to hike it, go home and sleep and when the situation gets worse, you call for an emergency Monetary Policy Committee to do what?” he asked.

In a related development, the World Bank has also classified Ghana as a high debt distress country as it projects the nation’s debt to Gross Domestic Product (GDP) of 104.6% by the end of 2022.

According to its October 2022 Africa Pulse Report, debt is expected to jump significantly, from 76.6% a year earlier, amid a widened government deficit, massive weakening of the cedi, and rising debt service costs.

It is also forecasting debt to GDP of 99.7% and 101.8% of GDP in 2023 and 2024, respectively. The size of Ghana’s economy is estimated at about $72 billion, whilst it is expected to spend about 70% of revenue this year to service its debt.

The report is coming at a time the Bank and the International Monetary Fund (IMF) are conducting a Debt Sustainability Analysis on the country.

Meanwhile, rating agency, Moody’s has downgraded Ghana’s long-term issuer and senior unsecured debt ratings to CAA2 from CAA1 and placed the ratings on review for downgrade.

The rating downgrade to CAA2, it said, reflects the recent macroeconomic deterioration, further heightening the government’s liquidity and debt sustainability difficulties and increasing the risk of default.