The immediate past deputy minister for Finance, Dr Stephen Amoah is advocating drastic changes to Ghana’s economic fundamental to help correct amonalies which he describes as “fundamental financial economic anomalies”.
He emphasised the urgent need to correct the anomalies to held address adverse impacts to safeguard the future.
Dr Amoah made this observation in a statement on the floor of Parliament on Tuesday, February 11, 2025.
He indentifies inconsistencies in the management of the policy rate by the Central Bank, inflation, and government securities, and cautioned that these are undermining economic stability and growth of the country.
Dr. Amoah who is alos the Member of Parliament for Nhyiaeso in the Ashanti region identified loopholes in Ghana’s policy rate adjustments and their impact on inflation and economic growth statung that while the policy rate—the interest rate at which the Bank of Ghana lends to commercial banks—has been increased to curb inflation, the results have often been counterproductive.
“In inflationary-targeted monetary policy, the policy rate is increased to reduce inflation and stabilize the economy. However, the data shows the opposite trend in Ghana.”
“Between 2020 and 2023, policy rates rose from 14.75% to 29.50%, yet inflation surged from 9.94% to 40.28%. This anomaly must be addressed,” he stated
He further explained that Ghana’s inflation is largely driven by cost-push factors, such as rising production costs, rather than demand-pull factors, where increased consumer spending drives prices up.
“When inflation is cost-push, increasing the policy rate only exacerbates the problem by raising the cost of borrowing for businesses, which rely heavily on debt financing,” he said.
Dr. Amoah also pointed to the impact of these policies on Ghana’s Gross Domestic Product (GDP) growth. He noted that GDP growth declined from 13.90% in 2011 to 3.4% in 2019, and further dropped from 5.10% in 2021 to 2.90% in 2023.
The former deputy Trade and Industry minister proposed a comprehensive review of Ghana’s economic policies, including a shift from a purely free-market economy to a mixed-market system.
He suggested implementing price caps for monopolies, oligopolies, and cartels to protect consumers and promote fair competition.
Dr Amoah also called for the establishment of a joint committee comprising the Finance Committee, the Economy and Development Committee, and the Budget Committee to engage with the Bank of Ghana and the Ministry of Finance.
He appealed to Parliament and relevant stakeholders to prioritize these issues and indicated these policy dysfunctions must be addressed to ensure sustainable economic growth, high employment, and a strong, stable currency.
Read the full statement published below:
