Time for a Bold New Path at the Bank of Ghana

Economist and Professor of Finance, Godfred Alufar Bokpin, has called for the Bank of Ghana to rethink its role and focus on bolstering the productive sectors of the economy rather than limiting its involvement to managing liquidity. He emphasizes that the central bank should play a more proactive role in influencing government policies to mitigate the negative impact of exchange rate fluctuations on the economy.

The Graphic Business aligns with this perspective, recognizing that the leadership transition at the Bank of Ghana presents a pivotal opportunity to reshape the institution’s approach to economic development. For years, the Bank has primarily centered its efforts on traditional monetary policy tools, such as managing inflation through interest rate adjustments and liquidity control. While these functions remain essential, they have proven inadequate in addressing Ghana’s current economic challenges. The country’s inflation rate of 23.8% as of January 2025, despite stringent monetary tightening, signals the need for a more comprehensive and innovative strategy.

The Bank’s controversial decision to provide GH¢77 billion in support to the government in 2022 highlights its capacity to intervene in critical economic matters. However, such interventions should be rechanneled toward fostering economic growth in productive sectors instead of serving as temporary fiscal solutions.

Professor Bokpin’s proposal for the Bank of Ghana to support initiatives like agricultural modernization and improved irrigation systems represents a more forward-thinking approach. These kinds of strategic investments can help strengthen the country’s economic foundation in the long run. Ghana’s foreign exchange challenges are not just a result of high demand but are rooted in structural supply issues. This reality requires a fundamental shift in the Bank’s role, from simply managing currency fluctuations to actively supporting the development of the nation’s productive capacity.

To achieve this, the central bank could develop targeted financial programs for export-driven industries, promote technological advancements in key sectors, and encourage other productivity-boosting initiatives. Rather than merely acting as a regulator, the Bank of Ghana should become a facilitator of economic transformation by fostering industries that drive sustainable growth and foreign exchange earnings.

However, before taking on this expanded role, the Bank of Ghana must first address its internal inefficiencies. Reports of high operational costs at the central bank have raised concerns about its fiscal sustainability and effectiveness. A streamlined operation, greater transparency, and stronger fiscal discipline are essential for restoring credibility and ensuring the Bank’s long-term success. In addition, addressing weaknesses within the country’s banking sector is paramount. Collaboration with financial intelligence units to combat fraud and corruption must become a priority to maintain the integrity of the financial system.

The ongoing IMF programme presents an opportunity for the Bank of Ghana to pursue these reforms while adhering to its macroeconomic stability commitments. While the IMF programme primarily focuses on stabilizing Ghana’s fiscal and monetary policies, it should not restrict the Bank from taking a more dynamic, developmental role in the economy. Other emerging economies have successfully navigated the balance between fiscal discipline and economic transformation, and Ghana must find a way to do the same.

The challenges facing Ghana today—ranging from inflation and currency depreciation to low levels of productive capacity—demand bold solutions. Relying solely on tight monetary policies and passive market oversight has demonstrated its limitations. The Bank of Ghana must evolve into an institution that not only ensures monetary stability but also plays an active role in driving the country’s economic development.

Dr. Asiama’s tenure as Governor of the Bank of Ghana will be evaluated not just on inflation control but also on how effectively the Bank contributes to Ghana’s overall economic progress. This includes creating a resilient financial sector, encouraging investments in productive sectors, and contributing to the creation of an economy that works for all Ghanaians.

Achieving this transformation requires a delicate balance. The Bank of Ghana must preserve its credibility and independence while expanding its role in national economic development. It must support government initiatives that drive growth without compromising its core mandate of maintaining monetary stability. By doing so, the Bank can help to build a more resilient economy that is capable of weathering external shocks and generating sustainable growth.

The future of Ghana’s economy hinges on the ability to navigate this critical transition. As Professor Bokpin suggests, it is time for the Bank of Ghana to embrace a new model—one that positions it as an active participant in the nation’s economic transformation, rather than merely a passive guardian of monetary policy.