Strengthening Monetary Policy in Ghana: A Call for Enhanced Collaboration and Research

Professor Mohammed Hadrat Yusif, a renowned Professor of Economics at the Kwame Nkrumah University of Science and Technology (KNUST), has emphasized the need for a robust partnership between the Bank of Ghana (BoG) and universities to improve the effectiveness of monetary policy in Ghana. In his professorial inaugural lecture, Prof Yusif advocated for a comprehensive research program that addresses pressing issues, including understanding the drivers of economic growth, the transmission mechanism of monetary policy, and the effectiveness of monetary policy instruments. He stressed that such collaboration is essential for making policy decisions that are sound and contextually relevant, ultimately contributing to economic resilience, price stability, interest rate stability, and exchange rate stability.

Key Takeaways:

• Prof Yusif recommends a stronger collaboration between the Bank of Ghana and universities to enhance the effectiveness of monetary policy in Ghana.
• A comprehensive and innovative research program is necessary to address the BoG's pressing needs, including understanding the drivers of economic growth, transmission mechanism of monetary policy, and effectiveness of monetary policy instruments.
• Prof Yusif suggests reviewing the existing Fiscal Responsibility Act, 2018 (Act 982) to enforce true fiscal discipline and adopting the Norway and Sweden model of transparency and accountability in government financing and debt management.
• The Bank of Ghana should consider shifting from Inflation Targeting to Nominal GDP Targeting as a rule for Monetary Policy to stabilize the labor market and the financial system in Ghana.
• Prof Yusif emphasizes the importance of fiscal policy in monetary policy effectiveness and suggests responsible mining, enhanced cocoa production, public-private partnerships, and support for local businesses as goals for Ghana.
• The Professor of Economics also suggests reviewing the Bank of Ghana Act, 2002 (Act 612, Section 30) to address issues of total government borrowing and fiscal year's total revenue.

Statistics:

*macroeconomic instability, high inflation, and unsustainable public debts in Ghana.

*The Fiscal Responsibility Act, 2018 (Act 982) mandates the government to maintain an overall fiscal balance on a cash basis with a deficit not exceeding 5 percent of the GDP for a particular year.

*The Bank of Ghana Act, 2002 (Act 612, Section 30) limits total government borrowing to no more than 10 percent of the fiscal year's total revenue.

Sources:

• Ghana News Agency. 20 Jun 2025. Prof Yussif advocates for stronger collaboration between the Bank of Ghana and universities.
• Kwame Nkrumah University of Science and Technology (KNUST). Prof. Yusif discusses Monetary Policy in Ghana: Revisiting the Tobin's Model.