New BoG Governor must be independent

Financial industry players are expecting the new central bank Governor to be ‘strong’, ‘resilient’ and ‘independent’ while being able to strike the balance between his office and government.

But before the President’s expected appointment, bankers have stated their opinions and expectations of the incoming Governor with most of them expecting the appointee to be stern and firm.

Frank Adu Jnr., Managing Director of CAL Bank, stated that the industry would love to have someone who knows what he/she is about, and not kowtow to excessive pressure from, especially, the executive arm of government.

“We would expect that the person be strong and resilient. We expect the person to do what is right and not be buffeted and bullied by anybody, or group of people; and that the person will simply do his job as required by the laws of the country when it comes to the Bank of Ghana Act,” he said.

Francois Marchal, Deputy Managing Director at Societe Generale Ghana, stated that the new central bank Governor should be independent but able to strike the balance between his office and that of government, because it is the country’s interests at stake.

“It is only cooperation with government that can work. No open conflict between the central bank and government is positive,” he added.

In an interview with the Voice of America, economist Felix Asante added that the new central bank governor must be bold on checking government spending. “Certainly, that person should be able to say to the sitting government ‘No, there is no money so I cannot honour the cheque’,” he said.

A similar opinion is shared by a Senior Lecturer and Economist at the University of Ghana, Dr. Eric Osei-Assibey, who said in an interview with the B&FT that the new Governor’s ability to withstand pressure from government will go a long way to put the economy on a good footing.

He further stated that the new Governor must be able to take a bold risk in reducing the policy rate to balance economic growth.

“I am looking forward to a central bank Governor who can keep one eye on inflation, which is very critical, and also another eye on economic growth -- so that the monetary policy rate does not always have to be adjusted upward but they can take just a little bit of risk and reduce it to motivate banks into reducing their lending rates,” he said.

Challenges ahead

Even though Dr. Wampah assumed his post amid high deficits in 2012 as a result of overspending in the 2012 elections, many expect the new Governor to restore market confidence by tackling interest rates and inflation.

Touching on the challenges in store for the new governor, Mr. Marchal said the major challenge for the new Governor will be to identify and spot when it is appropriate to reduce the level of interest rates to support a take-off of the economy, and then strengthen the supervision of NBFIs.

Mr. Marchal added that despite the establishment of a framework to regulate e-money, the new Governor must focus on proper regulation of the quickly evolving market.

Mr. Asante says tackling high interest rates and inflation should be top of the agenda for the new central bank Governor.

“In Ghana, the main concerns are the exchange rate and inflation," he said. "You cannot fix the exchange rate if you are not in control of what is produced in the country [and] encourage private sector to export.

“The economy should bounce back into its form where we can produce enough to export and earn foreign exchange. If we do not do that and we keep on importing, every Governor will come and have such problems.”

Inflation has climbed since 2012, though in February it dropped slightly to 18.5 percent from 19 percent in January.

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Source: Bernard Yaw Ashiadey& Obed Attah Yeboah | thebftonline | Ghana