Govt has locked GH¢60bn at Central Bank to tame inflation

Govt has locked GH¢60bn at Central Bank to tame inflation — Oppong Nkrumah

Former Information Minister and Ofoase Ayirebi MP, Kojo Oppong Nkrumah, has raised concerns over the Mahama administration’s decision to lock GH¢60 billion from the Ghanaian economy, cautioning that such a move could undermine production and job creation. Speaking on Face to Face on Channel One TV on Tuesday, October 28, Mr Oppong Nkrumah said the government’s aggressive absorption of liquidity, as part of its sterilisation programme, risks slowing private sector activity and economic growth. “This government has continued with the tight monetary policy until I think the last one when they eased it a bit. In addition to that now they have decided to go for sterilization. Now sterilization is part of the tool kit. In the short term it may help you, in the long term it has its own consequences,” he explained. He disclosed that the authorities have already collected about GH¢60 billion from the economy, effectively locking the funds at the Bank of Ghana. “They have collected 60 billion cedis from the Ghanaian economy because they believe it is excess liquidity and they have packed it at the Central Bank so that that money is not available to stimulate demand or to fuel production,” Mr Oppong Nkrumah said. The former minister acknowledged that sterilisation is a recognised monetary policy tool but argued that its overuse could have detrimental effects. “We may disagree on the extent of sterilization. But our view is that this extent of sterilization is a bit too much, because this kind of money you can use other economic tools to allow other agencies in the economic space to mobilize that money to fund production so that people will get jobs and things out of that,” he said. Mr Oppong Nkrumah contrasted the current approach with the monetary strategy of the Akufo-Addo administration, which he served under, noting that tight monetary policy had successfully reduced inflation from 54 percent at the peak of the global cost of living crisis in 2020 to about 23 percent by the time it left office in 2024. The MP stressed that while controlling inflation is crucial, policy efforts must now prioritise stimulating production and job creation to ensure sustainable economic recovery.

Speaking on Face to Face on Channel One TV on Tuesday, October 28, Mr Oppong Nkrumah said the government’s aggressive absorption of liquidity, as part of its sterilisation programme, risks slowing private sector activity and economic growth.

“This government has continued with the tight monetary policy until I think the last one when they eased it a bit. In addition to that now they have decided to go for sterilization. Now sterilization is part of the tool kit. In the short term it may help you, in the long term it has its own consequences,” he explained.

He disclosed that the authorities have already collected about GH¢60 billion from the economy, effectively locking the funds at the Bank of Ghana.

“They have collected 60 billion cedis from the Ghanaian economy because they believe it is excess liquidity and they have packed it at the Central Bank so that that money is not available to stimulate demand or to fuel production,” Mr Oppong Nkrumah said.

The former minister acknowledged that sterilisation is a recognised monetary policy tool but argued that its overuse could have detrimental effects.

“We may disagree on the extent of sterilization. But our view is that this extent of sterilization is a bit too much, because this kind of money you can use other economic tools to allow other agencies in the economic space to mobilize that money to fund production so that people will get jobs and things out of that,” he said.

Mr Oppong Nkrumah contrasted the current approach with the monetary strategy of the Akufo-Addo administration, which he served under, noting that tight monetary policy had successfully reduced inflation from 54 percent at the peak of the global cost of living crisis in 2020 to about 23 percent by the time it left office in 2024.

The MP stressed that while controlling inflation is crucial, policy efforts must now prioritise stimulating production and job creation to ensure sustainable economic recovery.