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Opinions of Saturday, 2 February 2008

Columnist: Doe, James W.

What the Monetary Policy Committee Report Should Do

The recent Monetary Policy Committee (MPC) news conference makes one pose the question, whether the Governor of the Bank of Ghana has played fair with Ghanaians? Or he is just pretending to be a novice to the content of this type of reporting. There should be in effect three parts or at most four parts to this report.

It is an audit report or summary of the economic performance of the country as regulated by the Central (Reserve) Bank. So overloading the report with all those figures that do not matter and deliberately eliminating the figures that matter is not good enough. The last paragraph should show the success or failure of what should have been and a mention of the remedial fiscal and/or monetary solutions to be used.

The report by the governor paraphrased by the Statesman is shallow on all aspects of standardised and acceptable reporting practice of this nature and does not fulfil the demands for such audits. Essentially, it could be classified as short of substance, does not seem to be well compiled and a waste of precious time.

One major failure of the report that makes it almost unacceptable is the fact that six months after a major exercise like the cedi re-denomination nothing was mentioned about the actual impact of the exercise.

The fact that as much as two quarters of financial reporting has passed since the exchange of old to new currency has ended and the Governor deliberately became silent on this major exercise is pathetic.

The reality of the hike in debt is the sign of predicted shrinking of the economy after re-denomination and the shift to preference medium to long term loans to service consumption rather than heavy infrastructure build-up of massive city subway (metro) transportation, office buildings, telecommunication and overall infrastructure in the economy.

The fact that Ghana's debt hits $7.1 billion brings to mind the issues of a worsening debt sustainability of the country. As seen in the massive decline in construction and manufacturing sector. One looks on and wonders what the inflation figures are to date.

Thinking about the current announcement of dummy doling of between 8 to 15 cedis a month to the poorest of the poor in an election years remarks the disjoint between policy and actual therefore, a recipe for massive debt unsustainability.

The governor will do Ghanaians a lot of good if he re-writes his report and include among others the impact of the re-denomination on the economy in an extraordinary report within thirty days. This should be demanded by Parliament and/or the President.

James W. Doe
Monetary Policy Researcher in Seoul, Korea

Views expressed by the author(s) do not necessarily reflect those of GhanaHomePage.