Dr. Ernest Addison, Governor of the Bank of Ghana, has emphasised the central bank’s perseverance in sustaining the economy amid the 2022 crisis, noting that the BoG deserved “applause” from Ghanaians rather than unnecessary insults.
Speaking at the Chartered Institute of Bankers’ Governor’s Day, Dr Addison praised the central bank’s role in keeping the economy from succumbing to the crisis’ strains.
“It is important to remind ourselves, as players in the global economy, that the crisis that hit the Ghanaian economy in 2022 was like what pertained in many other frontier and emerging market economies, including Egypt, Argentina, Turkey, Kenya, Sri Lanka, and Pakistan, just to mention a few. These countries, except for Sri Lanka, had built policy buffers and the resilience of their key institutions provided the needed anchor to hold their economies until reform packages were introduced.”
Dr. Addison went on to say that in the instance of Ghana, the bank was able to step in and assist the economy until the IMF programme was completed.
“With distinction, the Bank played a critical role in supporting the economy during the crisis period.” It is apparent that the bank’s involvement in assisting the economy throughout this crisis has not been completely appreciated, and in some cases has been purposefully misrepresented. The Bank was heavily criticised in the media, resulting in a coordinated protest against the organisation.
“Ladies and Gentlemen, central banks all over the world have had to re-evaluate their mandate since the global financial crisis of 2007/2008 and have supported fiscal policy to play a countercyclical role in stabilizing economies.
“Consequently, central banking has never been the same. Before the financial crisis, the quintessential task of central banks was straightforward, keeping inflation within a tight range through the control of short-term
interest rates. In a world of poly-crisis, central banks have found themselves broadening monetary policy formulation beyond interest rates to include the deployment of balance sheets in a variety of unconventional monetary policies.”
Dr. Addison went on to say that the economic crisis revealed a gap between theory and practice, but that “everything the Bank of Ghana did as various shocks hit the economy was consistent with prudent crisis management.”
“During the 2020 pandemic, the Central Bank supported budget financing to protect lives and livelihoods.” Again, in the 2022 economic and liquidity crisis, the Central Bank would not have behaved differently but would have functioned as an automatic stabiliser to prevent the economy from reaching a tipping point, which may have resulted in societal disturbances, as was the case in Sri Lanka.
Additionally, Mr. Addison stated that only a Central Bank that has been prudently run, built buffers, and well positioned, can step in to support an economy from collapse.
“It is therefore most appropriate, I believe, to state that Ghanaians should rather applaud and commend the resilience of the Bank of Ghana.”
