BoG Act needs clarity, improvement for easy implementation – Governor

Dr Ernest Addison, the Governor of the Bank of Ghana, says there is a need to improve the Bank’s (Amendment) Act, 2016 (Act 918) to make it clearer for implementation.

He said looking at the current Act, there were still inconsistencies and difficulties with implementation albeit efforts to improve it in 2016.

The Governor was answering questions at a press briefing after the 112th Monetary Policy Committee (MPC) meetings held from Wednesday, May 17, 2023, to Friday, May 19, 2023.

The MPC maintained the policy rate at 29.5 percent.

The Committee deliberated on a variety of macroeconomic issues, including the impact of the Domestic Debt Exchange on the economy, recent macroeconomic developments, and risks to inflation and growth outlook.

The price developments since the last MPC meeting in March 2023, point to a continued easing of inflationary pressures, with two additional consecutive declines in headline inflation.

The MPC deliberated on a variety of macroeconomic issues, including the impact of the Domestic Debt Exchange on the economy, recent macroeconomic developments, and risks to inflation and growth outlook.

There had been a further deceleration in headline inflation to 45.0 percent in March 2023 and then to 41.2 percent in April 2023.

The Governor said firstly was the issue of when to speak about the 5 percent limit.

He said there were measurement issues that needed to be clarified.

“What do you call an emergency, let us define it very carefully and make the conditions under which the rules can be breached clear,” he said.

The Governor said there were procedural issues and the law was not very clear such as who does the reporting to Parliament, should the Governor or the Minister of Finance do the reporting.

“All of these issues need to be clarified in the law. In any case, most of the reporting is done through the Minister of Finance,” he added.

He said the Governor does not really have a direct obligation to Parliament and for him, that was not very clear.

“So all of these issues have to be properly clarified in the law and I believe that there is a need to do that,” he added.

He said even if there was the most perfect law, what happened in 2022, would not have been different because the choice of either to grind the economy to a halt or allow government operations to come to a standstill, which was worse than the problem itself.

The Governor said the issue of the law was fine, but in an economic crisis, things ought to be done differently.