- A new report by financial experts urges the Ghanaian government to significantly cut spending to combat rising inflation.
- The report argues that these methods have become less effective due to Ghana's economic structure adapting over time.
- The report highlights the need for a multi-pronged approach, with spending cuts complementing adjustments to monetary policy.
A new report by financial experts urges the Ghanaian government to significantly cut spending to combat rising inflation. Authored by Banking Consultant Dr. Richmond Atuahene and Data Analyst Isaac Kofi Agyei, the report titled “Thirsty Banks: Ghana’s 2023 Challenge with High Cash Reserve Ratios” criticizes the government’s reliance on traditional methods like raising reserve requirements for banks.
The report argues that these methods have become less effective due to Ghana’s economic structure adapting over time. They cite research by Bawumia (2010) suggesting high reserve requirements are a consequence of past high fiscal deficits.
Instead, the report advocates for substantial fiscal interventions, including a 30% reduction in government spending. This, they believe, is crucial to navigate the current economic challenges.
“Authorities must proactively reduce central government spending by an additional 30%,” the report states. “This reduction should focus on trimming down flagship programs that haven’t delivered significant economic benefits.”
The report highlights the need for a multi-pronged approach, with spending cuts complementing adjustments to monetary policy.
