Deputy Ranking Member on Parliament’s Finance Committee, Dr. Gideon Boako, has expressed concern over the apparent lack of coordination between the fiscal and monetary authorities in government.
He criticized the Finance Ministry’s handling of Treasury bill rates and warned that its approach was inconsistent with monetary policy decisions by the Bank of Ghana (BoG).
According to him, this disjointed approach undermines economic stability and could have serious repercussions for the country’s financial system.
Inconsistent policy measures undermining stability
Dr. Boako pointed out that the recent decision by the Bank of Ghana to raise the policy rate by 100 basis points, from 27% to 28%, contradicts the Finance Ministry’s efforts to force Treasury bill rates down from 29% to as low as 15% for 91-day bills.
He questioned why the Central Bank was not more aggressive in managing excess liquidity to maintain price stability.
“When you advise the government, they won’t listen. But how do they feel now that their so-called ‘artificial’ drop in T-bill rates—engineered for propaganda—has been undone?” Dr. Boako stated.
Commending the central bank’s policy direction
Despite his concerns, Dr. Boako commended the Bank of Ghana for its latest policy direction, which includes plans to introduce a 273-day instrument to strengthen its sterilization measures. “Well, at least the Governor of the Central Bank listens—unlike the Finance Minister,” he remarked.
He argued that this move would support the disinflation process, something he believes the Finance Ministry has failed to address effectively.
Treasury bill undersubscription
Dr. Boako further pointed to the recent undersubscription of Treasury bills in the last two auctions (21st and 28th March) as evidence of poor fiscal management.
He argued that the Finance Ministry’s missteps in handling fiscal policy have created uncertainties in the market, making it difficult for investors to have confidence in government securities.
“The Finance Minister must take a cue: macroeconomic management is critical to national financial stability. The ongoing policy incoherence between the Finance Ministry and the Central Bank exposes a worrying lack of coordination,” he emphasized.
Call for fiscal and monetary policy alignment
Dr. Boako urged the government to realign its fiscal policies with monetary measures to avoid further economic instability.
He emphasized the need for close collaboration between the Finance Ministry and the Bank of Ghana to ensure a cohesive and effective approach to economic management.
“Policy alignment is essential for stability. Without a clear and coordinated approach, Ghana risks further economic challenges that could have been avoided with better planning and cooperation,” he concluded.
