The Governor of the Bank of Ghana (BoG), Dr. Johnson Asiama, has cautioned that tensions in the Middle East could pose risks to Ghana’s financial stability if the situation persists.
Speaking at an international conference organised by Ghana Export-Import Bank to mark its 10th anniversary, Dr. Asiama said the central bank is closely monitoring developments and has put in place contingency measures to manage potential shocks.
“But unfortunately, as some of you are aware, we have the Middle East crisis knocking on our doors; what we call global economic shocks, geopolitical shocks, they are some of the things we have to contend with,” he said.
He expressed hope that the conflict would be short-lived but warned that a prolonged crisis could require additional policy interventions.
“Our hope is that the crisis will be short. If, however, it persists, then we will have to design some different policy measures to contain,” he noted.
Despite the concerns, the BoG Governor reassured that Ghana is better positioned to absorb external shocks, pointing to existing safeguards within the financial system.
“But no worries. This is not the first time Ghana’s economy is suffering global shock. We will get the way,” he said.
Dr. Asiama revealed that the central bank is working closely with the Ministry of Finance and other state institutions to coordinate responses.
“We are in contact with the Ministry of Finance and the other government agencies on what to do and at what time the contingency measures are in place,” he added.
He further indicated that Ghana’s reserve levels remain strong, providing a buffer against potential disruptions.
“Our reserves levels are comfortable, we are in sync with the other players of government and I’m sure we’ll pull through this one as well,” he assured.
Reflecting on recent economic management, Dr. Asiama explained that the central bank had to take tough decisions to stabilise the economy after inheriting a challenging macroeconomic environment marked by high inflation and excess liquidity.
“It was like a patient that has had blood transfusion in excess just too much blood has been injected. No matter what you do, it won’t be effective,” he said, using a medical analogy to describe the situation.
He noted that measures to “drain” excess liquidity were necessary, even though they came at a cost.
“We needed to mop that liquidity from the system. That has come at a cost, but it was a necessary measure to ensure that our interventions will be effective,” he explained.
According to him, those interventions contributed to improved economic indicators, including a decline in inflation and relative stability of the cedi.
“That is why we saw inflation end the year at about 5.4%. That is why you see the cedi ending the year around 10.4%. I didn’t know it could appreciate to that extent,” he said.
He added that while the cost of the interventions was significant, it was largely a one-off.
“When I assess the cost, we have incurred, it’s not fatal it’s like a one-timer cost,” he stated.
Dr. Asiama emphasised that the priority now is to sustain the gains while remaining prepared for external shocks, including the ongoing geopolitical tensions.
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