Togbe Afede XIV has described responses made by the Bank of Ghana over his earlier submission on the Monetary Policy Rate as “misrepresentations and outright lies”.
According to him, none of Bank of Ghana’s arguments justify the astronomically high monetary policy rates that have burdened the Ghanaian economy over the past 20 years.
“We cannot use “higher interest rates to maintain exchange rate stability”. It has not worked for us. Parity laws tell us the opposite. And certainly, the high monetary policy rates will not help efforts to remove the “structural bottlenecks” that BoG alluded to”, the respectable Chief said.
“Secondly, just as BoG makes reference to “years of macroeconomic mismanagement”, ten years from now, the same reference will be made if the approach to monetary policy formulation does not change. I hope BoG appreciates that macroeconomic mismanagement can come from both the fiscal and the monetary”, he explained.
“Thirdly, the aggressive pursuit of profits by the BOG has created conflict, a moral hazard situation that has been bad for our economy. They set the rules, and determine price! This must cease, and the bulk of the profits made must be paid to the shareholder, Government, by way of dividends”, he outlined further.
“Fourthly, critical open-mindedness is the hallmark of true professionals and policy makers, and one cannot be doing the same thing the same way for 20 years and expect different results. I made the same arguments in May 2003 and throughout my time on the board of BoG, August 2003 to July 2013. After 20 years of failure to bring inflation under control, BoG must eat humble pie, and take an honest, dispassionate and critical look at their approach and methods”, he stated.
“Indeed, it is about time we deal with this monetary policy bottleneck that has hurt our development prospects over the years. The consequences are everywhere – in the manufacturing sector, the real estate sector, etc. The lethargic development of our mortgage sector and our inability to meet our housing needs, for example, are largely consequences of the high inflation and interest rates that have crippled the long-term debt market”, he added.
“It is unfortunate that not since May 2003 when I questioned the soundness of BoG’s monetary policy has there been any open debate on the subject. I would urge our economists to show some interest. The “independence” of BoG does not grant it immunity from constructive critics”’, he concluded.
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