Ghana’s inflation woes can be attributed to the Central Bank’s excessive money printing and the government’s neglect of productive sectors, according to renowned economist Prof. Godfred Bokpin.
In an appearance on The Big Issue on Channel One TV, Prof. Bokpin highlighted the dangers of unchecked liquidity injection, warning that it can have far-reaching consequences.
“If you look at Ghana and the injection of excess liquidity, at some point, the Central Bank even denied it. In 2022, if you look at the Domestic Debt Exchange, we were talking about GH¢77.6 billion by way of overdraft lending to the Ghana Government. What do you expect?” he questioned.
Prof. Bokpin emphasized that the root cause of inflation lies in the mismatch between aggregate demand and supply.
“What is the source of that excess aggregate demand? It is coming from the excess printing and injection. To the extent that they didn’t go to the production sectors of the economy, it is not unexpected to see inflation go up the way it is,” he explained.
The economist also cautioned that the government’s reliance on monetary tightening measures, such as tiered reserve requirements, may not be the most effective solution.
“The more you are mopping up excess liquidity, remember, it is going to have implications in terms of access to credit by the private sector. So, the economy’s productive capacity has not been enhanced in the last couple of years,” he stated.