Renowned economist, Prof. Godfred Bokpin, has attributed Ghana’s rising inflation to excessive money printing by the Central Bank and the government’s failure to invest in the productive sectors of the economy.
Speaking on the country’s economic challenges on The Big Issue on Channel One TV, Prof. Godfred Bokpin pointed to the injection of excess liquidity as a major trigger for inflation, warning that continuous monetary tightening without addressing structural issues will stifle private sector growth.
“If you look at Ghana and the injection of excess liquidity, at some point, the Central Bank even denied it. In 2022, if you look at the Domestic Debt Exchange, we were talking about GH¢77.6 billion by way of overdraft lending to the Ghana Government. What do you expect?” he questioned.
According to Prof. Bokpin, inflation is driven by aggregate demand exceeding aggregate supply, which, in Ghana’s case, has been fueled by the unchecked printing of money rather than real economic productivity.
“What is the source of that excess aggregate demand? It is coming from the excess printing and injection. To the extent that they didn’t go to the production sectors of the economy, it is not unexpected to see inflation go up the way it is,” he explained.
He noted that while the government has been implementing monetary tightening measures such as tiered reserve requirements to mop up excess liquidity, this approach comes at a cost.
“The more you are mopping up excess liquidity, remember, it is going to have implications in terms of access to credit by the private sector. So, the economy’s productive capacity has not been enhanced in the last couple of years,” he stated.