The Central Bank By Its Own Operational Independence, Would Not Mix Politics With Principles – IMANI

Good morning. Okay, I heard Mahama say he wants to pay all depositors of defunct financial institutions 100% their due. I see. What I do know is that the current government under Nana and Bawumia has made great efforts to pay some good number of depositors. The ball point figure is a staggering 21.5bn cedis though. I believe the government should not have been overly zealous in carrying this burden alone. It creates the perception of crony capitalist and rent-seeking on the minds of libertarians like me. Of course, I had reservations and still have in the manner some of the financial institutions were treated. It smelt like politics. Reason some are being battled out in court.

However, as I said on August 1, 2018, I was super excited about the current leadership at the Central Bank of Ghana. Correcting laxed supervisory functions in my view should never be equated to political witch hunt. The Central Bank by its own operational independence, would not mix politics with principles. I hope it is what I still believe. This stellar performance to clean the banking sector of ghost bankers is what is direly needed for an economy whose monetary policy underpinnings have for far too long been rail roaded by politics. Slowly, the faith IMANI folks had in the appointment of the Governor wasn’t in vain. It is possible to get to the standards in the West.

I recall my interaction with the the Bank of England in December 2015 as pàrt of my Special Visitor’s programme to UK government’s varied instutions of influence. I had met with the Director for International Development of the Bank. I learned, that the Bank of England performed three roles– ensuring micro prudential, macro prudential and monetary Policy. The Bank is independent in ensuing the fiscal targets set by any UK government is met. However, if the government deviates from what the bank proposes to be done, then it loses credibility and will be punished by the voting public. Curiously, the Monetary Policy Committee’s decisions are published but will in the interest of transparency and market confidence, publish minutes of its meetings including what each of the nine -member committee said in its meetings. As I mentioned to some folks, I froze! Back in the motherland, GH at the time, and for many years preceding 2015, our finance ministers can have a fiscal target, the central bank can have a mind of its own, and the electorate can simply applaud. Today though, Covid-19 has provided cover for the current government to throw away all elements of fiscal prudence . Not cool giving some of the planned expenditure is purely unproductive.

The parting words of the director to me was ‘find a way to make it impossible for politicians to get away with smokes’. I took his word. Should we be guided by current trends within Ghana’s Central Bank, it is possible to be England. But IMANI and myself believe we have found in Dr. Addison, a champion of prudent banking, with testicular fortitude to ward off political interference in the performance of his duties. We hope we are still right. Good stuff!!

PS: Can the government take a second look at the Customs Act on imported salvaged vehicles? There must be a balance. Not everyone can buy those new cars assembled here. More important, we must not be seen to be creating avenues for mass unemployment. Imagine, semi- formal sprayers, mechanics, spare parts dealers catering to a certain class of clients cannot be wiped away just like that.
As a brother said to me yesterday, “we obviously are not just starting a new industry,we are also killing off an extensive livelihood support structure…we’re just about to release a deadly cocktail of potential armed robbers”. Let us think about these things. –Please enjoy your weekend and if you can, tune in to the Big Issue on Citi 97.3fm from 9am.- Franklin Cudjoe.

Source: Zackgh.com

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