Reform the Economic Management Team

The Economic Management Team (EMT) in Ghana was officially established in 2001 by the administration of President John Agyekum Kufuor. The EMT was created to strengthen economic governance and policy coordination of the administration. The Economic Management Team serves as an advisory body to the President on economic matters and ensures effective management of the economy: there are no statutes governing the EMT. Its advisories are consequently not binding on any institution of state.

Successive governments have maintained and used the EMT, by reconstituting it with key ministers and economic experts to reflect the administration’s priorities. Traditionally, the Vice President chairs the Economic Management Team (EMT), supported by the Finance Minister, the Governor of the Bank of Ghana, other key ministers and stakeholders. The Vice President coordinates its work.

In an article titled “Is the Economic Management Team Relevant? I emphasized that “the relevance of the Economic Management Teams that are formed by various political administrations – governments, are over-elaborated. There are institutions of state that are empowered by statutes to lead in the country’s economic governance and development. The creation of the Economic Management Team, which is usually a temporary management team, duplicates roles played by the Finance Ministry, the Bank of Ghana and the National Development Planning Commission.” (see www.ModernGhana.com).

Since the establishment of the EMT, either the President or the Vice has or had background in Economics. President Kufuor has background in Economics, his Vice, the late Alhaji Aliu Mahama did not have. Late Professor Atta Mills had background in Economics, the President-elect, then a Vice President does not have background in Economics. President Mahama does not have background in Economics, but his Vice, the late Amissah Arthur had background in Economics. Nana Akufo-Addo, though read Economics, his formal education and career were primarily in law and politics, but his Vice Dr Mahamudu Bawumia has a strong background in Economics. He has had extensive academic and professional experience in Economics.

This is the first time a President and the Vice both do not have backgrounds in Economics. It is not mandatory for the country to be led by persons with backgrounds in Economics. That is, the President and the Vice do not need to have backgrounds in Economics to effectively govern the nation. Yet, it is necessary for the Vice to have such technical expertise to understand the institutional choices of the state establishments responsible for managing the economy if she is supposed to provide economic advisory to the President through the EMT.

The President-elect should critically assess his inputs into the decision-making processes, advisories and choices of the EMT he led between 2009 and 2012, and take appropriate steps to reform the EMT by delegating the responsibilities of economic management to the Bank of Ghana and the Ministry of Finance, with support from other relevant institutions.

The Bank of Ghana and the Ministry of Finance, in fact, must take center stage in economic management. The conversation in Ghana with regard to economic management is solely focused on managing economic variables such as inflation, exchange rates, public debt management, interest rates, taxes, public expenditures, stability of the cedi through an improved exchange rate regime, currency issuance, borrowing etc. The Bank of Ghana and the Ministry of Finance have the responsibilities for managing these variables.

The Bank of Ghana – the Central Bank of Ghana, plays a key role in monetary and financial management. The BoG is responsible for formulating and implementing monetary policies to ensure price stability – controlling inflation, regulates money supply and interest rates, regulates and supervises financial institutions in Ghana, ensures foreign exchange management (regulates the forex market and stabilizes exchange rates) as well as advise the government on financial matters.

The Ministry of Finance, on the other hand, monitors and evaluates budget implementation, helps to mobilize revenue through the use of fiscal policies – taxes, manages the public debt of the country – ensures debt sustainability, monitors expenditures to maintain fiscal discipline, formulates fiscal policies as well as provides advice on fiscal, economic and financial matters to support the decision-making of the government. So, proper economic management must be led by these two institutions.

As a non-expert in Economics and Finance, the Vice President must be precluded from attempting to give critical technical advice, such as recommending specific economic models or policies, financial instruments or technical procedures to achieve the macroeconomic objectives and other economic policies of the government. The Vice President should provide leadership to the Economic Management Team (EMT), and focus on broader questions of purpose, relevance and impacts of the choices of the technical people at the Ministry of Finance and the Central Bank of Ghana.

The Vice President should be given some specific roles other than providing advisories at the EMT to the Minister responsible for Finance or the Central Bank governor. There are several areas the President-elect can task the Vice President to focus on. Economic Management does not only deal with managing inflation, public debts, interest rates, taxes as well as the stability of the cedi. Yet these areas are too technical and require inputs that are technically developed to effect real impacts. The Vice President can focus on education, decentralization and other areas she can provide critical technical expertise.

I recommend an Economic Management Team with established specialized working committees which will report to the Chair of the EMT, the Vice President. There must be a Fiscal and Debt Management Committee that should focus on public expenditure controls, debt management and resources mobilization. The Minister responsible for Finance and the Head of the Ghana Revenue Authority can lead this Committee. The GRA and the Ministry of Finance can work hand-in-hand to manage the fiscal policies of the new government.

Then, there must be a Monetary Policy and Financial Stability Committee which will oversee inflation targeting, interest rates, exchange rates management and financial sector stability. The Monetary Policy and Financial Stability Committee must be headed by the Central Bank Governor. Energy and Infrastructure Committee must equally be created to address energy security issues and critical infrastructural development. The EMT must also have a committee that focuses on education and other social issues.

The new EMT to be formed should have independent economists – at least three, from the Universities in Ghana: An Economist from the ISSER, for instance, can provide valuable economic insights to the government. The EMT must be democratic, by considering the constructive criticisms of the independent economists from the academia.

The Chief Economic Advisor to the President must serve on the Fiscal and Debt Management, as well as the Monetary Policy and Financial Stability Committees. There will be a cabinet to advise the President on crucial national issues, so the Economic Management Team should not have a long list of members selected from various institutions. It must have a manageable structure.

The goal of the President-elect in establishing his Economic Management Team should emphasize on inclusivity, technical expertise, policy coordination and accountability in order to create a robust and disciplined team capable of addressing complex economic challenges with a focus on sustainable economic growth and development.

Emmanuel Kwabena Wucharey
Economics Tutor, Advocate and Religion Enthusiast.