Prof. Eric Osei Assibey
A BOARD member of the Bank of Ghana, Prof. Eric Osei-Assibey, says the continuous depreciation of the cedi, inflation and lending rates could be lowered if government demonstrates fiscal discipline.
He also indicated that other measures such as diversification of the economy could also boost economic growth and reduce the cost of borrowing by the government.
He said, “We must become more competitive, export more, and make sure that our inflation levels are kept low by producing on large scale. We must also ensure that we have higher productivity and also make sure that there is fiscal discipline all the time”.
Speaking to the media, the economist said the high lending rates and depreciation of the cedi could be corrected through diversification which would help change the structure of the economy.
The government has been borrowing at a high rate on the domestic market this year, due to a lack of access to the international capital market as well as inadequate revenue mobilization.
He mentioned that failure by the government to implement certain fiscal measures will amount to a recycling of old problems still facing the country.
He added that the Central Bank would have no option but to increase the policy rate to stabilize inflationary expectations.
“If you do all that and there’s no fiscal discipline and government continues to spend more than it generates, government will continue to borrow more and then the cost of borrowing will continually to go up,” he added.
By Ebenezer K. Amponsah