Development economist and a Senior Research Fellow at the Institute of Economic Research and Public Policy (IERPP), Dr Frank Bannor, has entreated the managers of the economy to end the continuous injection of US Dollars into the economy and focus on actual growth in the real sectors of the economy.
Dr Bannor noted that the Bank of Ghana is driving artificial growth of the economy which has dire implications eventually and has recommended that the government pays much attention to areas of growth.
“For far too long, all that the government has been doing is to inject more US Dollars to shore up the Cedi, a phenomenon that has created an artificial growth. Inflation is down and the local currency is not doing badly, but all these are good, but they have adverse consequences for the economy in the medium to long term. Aside the US$4 billion thrown into the economy, an additional US$1.2 billion is being released into the market by the central bank,” he said.
He added that this artificially induced growth of the economy is not creating jobs, but rather creating unemployment as imports have become cheap, thereby encouraging manufacturers to close their factories and rely on imports to supply to traders.
“Due to the excessive supply of forex in the market, with the Cedi performing better against the US Dollar, manufacturers have ditched producing in the country and falling on imported goods from China. The consequences are dire. Moreover, the rate at which the Bank of Ghana is intervening in the forex market is quite unsustainable,” he said.
A major concern, the GIMPA economist highlighted, is the consequences for the economy when the supply of US Dollars is affected by the fight against illegal mining activities popularly known as galamsey.
“We are fighting galamsey, which is a good thing, but we also know that the main supplier of the gold sold for forex is the GoldBod. We also know that the GoldBod gets over 60% of its gold from galamsey. This means that GoldBod will be hit hard and, forex supply will take a downward trend. This is why the BoG and the Finance Ministry must refocus their efforts towards growing the real sectors of the economy, for our reliance on gold will fail us,” he emphasised.
Dr Bannor urged the government to quickly implement policies that impact the real sectors of the economy as that is the only way real and lasting growth can be achieved by government.
In his concluding remarks, the Senior Research Fellow at IERPP indicated that there’s the issue with the opportunity cost of such a spending by the government.
“The government could have invested the money into the 24-hour economy to create the much needed jobs for the unemployed youth. This, in turn, will have boosted production and tax revenue in the medium to long term” he stated.
