The Paramount Chief of Asogli Traditional Area, Togbe Afede XIV, has once again charged the Bank of Ghana to address the perennial volatility of the Ghana cedi and the high interest rates in the country.
According to him, the Central Bank is veering off its core mandate of ensuring price and exchange rate stability as their contribution towards the realisation of the macro-economic objectives of growth and job creation.
Receiving the board of the National Petroleum Authority in a courtesy call, he questioned the high profit trumpeted by the Bank of Ghana in 2020, which he believes is as a result of the high interest rates that are costs to other sectors of the economy.
“The banking sector is making huge profits. Absa reported a profit before tax of ¢1.1 billion, while Ecobank and GCB reported after-tax net incomes of close to ¢600 million last year. BOG itself made a profit of ¢1.57 billion ($270 million) in 2020, about four times the profit that Bank of England made.”
“Bank of England presides over a $2.7 trillion economy. Ghana’s economy is only about a $72 billion, about one-fortieth, yet our central bank made so much money. Sadly, from the high interest rates that are costs to other sectors have to bear. High interest rates have only succeeded in creating the most profitable banking sector in Africa, while wreaking havoc on other sectors and destroying the structure of our economy”.
He further bemoaned the state of industries in Ghana, owing to the fact that most important sectors are owned by foreigners which he believes does not augur well for Ghana.
Togbe Afede XIV therefore called for a change in the structure of the economy, questioning the high inflation which has become a permanent feature of the economy.
‘If you look at our economy, including the oil and gas sector, you will realize that the bulk of it, unfortunately, the most important sectors, are owned by foreigners. So, a huge chunk of our earnings accrues to foreigners. Our mining, banking and telecoms sectors are dominated by foreigners. Thus, large movement of funds out of these sectors, for dividend payments, for example, wipe out our trade surpluses, and invariable, we suffer deficits, with adverse ramifications for the cedi.”
“It means that the structure of our economy has to change. We learned and talked about this since the time we were studying economics in secondary school. Can you imagine?”
He called for a relook at the approach to tackle inflation as a country and called for a positive fiscal, trade and monetary policies.
“The Bank of Ghana has always tried to fight inflation with high interest rates, but it has not worked. The problem is they increase interest rates based on recorded inflation, among others, which is effectively past price changes, instead of expected inflation. Their approach inadvertently transmits past trends into the future, in a self-fulfilling prophecy.”
“We need, as a nation, to look critically at how we fight the battle against inflation”, he intimated.
Source: Joy Business
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