The Governor of the Bank of Ghana, Dr. Johnson Asiama has emphasized the need for greater transparency and improved communication in monetary policy decisions.
Dr. Asiama who was speaking at the opening of the 123rd Monetary Policy Committee (MPC) meeting, acknowledged concerns that MPC decisions often appear opaque to the public. To address this, he proposed publishing voting outcomes and enhancing the clarity of policy statements to build trust and improve market understanding.
Dr. Asiama, who previously served as Deputy Governor, expressed his commitment to strengthening the credibility of the central bank. With inflation still above 23%, he noted that monetary policy must remain disciplined and forward-looking to ensure sustained economic stability.
The governor who was addressing both internal and external committee members at the MPC noted that while inflation is gradually easing, its pace remains slow, particularly due to persistent food price pressures. External conditions have been favorable, with Ghana enjoying a strong trade surplus and increased foreign reserves due to gold exports and remittances. However, Dr. Asiama cautioned that global risks, such as rising geopolitical tensions and weakening Chinese demand, could disrupt this progress and put pressure on inflation and exchange rate stability.
Domestically, he pointed out that fiscal challenges remain a concern. The 2024 budget deficit exceeded program targets, raising questions about Ghana’s ability to meet upcoming IMF reviews. Encouragingly, early signs of fiscal consolidation in 2025 suggest some corrective measures are taking hold, but uncertainty lingers. The Governor stressed that a stable fiscal environment is crucial for monetary policy to be effective in taming inflation and maintaining investor confidence.
With increased liquidity in the banking system, commercial banks have raised concerns about the Cash Reserve Ratio (CRR) framework, which could have implications for inflation, credit availability, and foreign exchange demand. While private sector credit is recovering in nominal terms, real credit growth remains weak, and non-performing loans (NPLs) are still a challenge. According to Dr. Asiama rural and microfinance institutions are stabilizing, but regulatory reforms must continue to ensure long-term resilience.
Reflecting on past policy missteps, the Governor acknowledged that loose fiscal policies during economic stress, weak coordination between monetary and fiscal authorities, and delays in structural reforms contributed to inflationary pressures and reduced policy effectiveness. He urged the MPC to learn from these experiences, not to assign blame, but to prevent history from repeating itself. A stable monetary policy, he argued, requires strong institutional frameworks that prioritize long-term economic stability over short-term political considerations.
Beyond immediate monetary policy concerns, Dr. Asiama also pointed to deeper structural issues affecting Ghana’s economy. He emphasized the need for greater investment in agriculture, addressing exchange rate misalignments, and deepening domestic financial markets. While these challenges are beyond the scope of the MPC’s immediate decisions, they remain crucial for shaping Ghana’s economic trajectory in the medium to long term.
In concluding his remarks, the Governor framed the central challenge facing the MPC: balancing inflation control with economic recovery in an increasingly uncertain global landscape. He acknowledged the risks of elevated liquidity, soft real interest rates, and fiscal fragility but also highlighted Ghana’s strong foreign reserves and the credibility of its policy framework as stabilizing factors. Urging rigorous, evidence-based deliberations, Dr. Asiama formally opened the meeting, setting the stage for critical monetary policy decisions in the days ahead.
By Desmond Tinana
