<\/p>\n
\n
Economist at the University of Ghana Business School, Professor Lord Mensah, says it is time for the managers of the economy to review and probably reduce government\u2019s expenditure as a measure to control inflation.<\/p>\n
According to him, following the latest monetary policy action taken by the Central Bank, there is nothing more the Bank of Ghana can do to control inflation and the fast depreciation of the cedi, hence the need for the government to step in immediately.<\/p>\n
Speaking on JoyNews\u2019 PM Express, he said, \u201cThe Central Bank for now has exhausted its policy measures. What is left is the fiscal side \u2013 what the economic managers are doing \u2013 and possibly we may have to look at our expenditure.\u201d<\/p>\n
His comment follows the Central Bank\u2019s decision to increase the policy rate by 300 basis points to 22%, after an Emergency Monetary Policy Committee meeting on Wednesday, August 17, 2022.<\/p>\n
The move is part of measures to address the risks to the inflation outlook.<\/p>\n
However, cost of borrowing is expected to go up significantly, and consequently increase cost of living and doing business.<\/p>\n
In less than 8 months, the Cedi has come under intense exchange rate pressure due to its continuous depreciation to some major international currencies such as the Dollar, Pound and Euro.<\/p>\n
According to data put out by the Bank of Ghana, the Cedi began the year at $1.00 to GH\u00a26.02.<\/p>\n
Just a month ago, one could exchange $1.00 for GH\u00a27.43, and in less than 20 days, traders needed an average of GH\u00a29.37 to buy $1.00.<\/p>\n
This means the Cedi has lost more than GH\u00a23.30 of its value to the dollar in less done 8 months.<\/p>\n
Prof. Mensah suggests the only option out now is to review some, if not all, of government\u2019s flagship programmes in an expenditure mitigating effort to contribute to easing the pressure on the cedi.<\/p>\n
\u201cIf you look at the Mid-Year budget review, there was no signaling there that we are ready to cut down expenditure. All the policies and then the investment we want to do from the main budget that we read in November is still in existence. We talk about Agenda 111, all the policies, Free SHS is still in existence. <\/p>\n
\u201cWhether it should be reviewed or not, we may have to look at all this. So effectively, we\u2019ve not come up to say that we\u2019re ready to cut down expenditure \u2013 I\u2019ve heard some other economist saying that of course government should continue spending, but I can tell you that if you have the money that\u2019s when you spend, if you don\u2019t have it you\u2019ll spend and you\u2019ll put your economy in trouble.<\/p>\n
\u201cSo for me I think it stops with the fiscal side. Bank of Ghana has exhausted all the monetary policy measures that is needed to keep inflation and all those exchange rate on track. So let\u2019s look at the fiscal side,\u201d he said.<\/p>\n
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