Reviewing The Present Monetary Policy Of Ghana And It Effect To Job Employment

Monetary Policy is the process by which the monetary authority of a country in this case Bank of Ghana controls the supply of money, often targeting an inflation rate or interest rate to ensure price stability and general trust in the currency.

The further goals of a monetary policy are to contribute to

• Economic Growth
• Employment
• Exchange Rate

The Monetary Policy has two mission to achieve for every economy either to boost the growth or slow the rate of growth depending on the circumstance, with the ultimate purpose to build a strong and a vibrant economy according to the theoretical postulation of Keynesian which every financial economist is a disciple to and the basic principle that guide the foundation of Bank of Ghana operations, emphatically stated on their website and most of their publication.

To achieve that, there are two methods to adopt proposed by John Maynard Keynes

• Expansionary Method
• Contractionary Method

• The Expansionary method is adopted during recession or slow growth in the global economy to combat unemployment by lowering interest rate hoping that easy credit will entice businesses into expansion. In my Phenomenology studies on businesses in Ghana, published by ADRRI Journal titled “THE ECONOMY SUFFER STAGNANCY WHEN DOMINATED WITH THE ACTIVITIES OF SMALL BUSINESS OWNERS” exposed why such theoretical policy application will fail to work effectively in Ghana irrespective of moderation ratios adopted by Bank of Ghana with respect to time due to the kind of SMEs ecosystem in existence. So the effort of this Expansionary Policy to stimulate aggregate demand to course rise in employment leading to economic growth as a future expectation will be a fiasco. So such theoretical tool to be adopted by Bank of Ghana is fallible to the kind of macroeconomics system in existence because most of the SMEs in Ghana are driven by Small Business Owners instead of Entrepreneurs. So the question who is an Entrepreneur and who is a Small Business Owner (SBO) underscore the reason why you have to get the above publication and read

• Adoption of this Contractionary method is intended to slow Inflation in order to avoid the resulting distortions and deterioration of asset values. The economic effect proposed under the Keynesian theory is to decrease government spending and increase taxes as an essential tool in building the frame work for strong economic growth and working towards full employment. This Policy tool is applied when your economy is booming and seeking to slow it booming effect.

The question we raised as an Institute is what kind of Economic Policy is adopted by Bank of Ghana as at now, if not a matter of people idiosyncrasy. How could government adopt contractionary policy yet increasing spending and raising taxation concurrently; we arrive by such conclusion by critically analyzing it, through its fiscal policy direction;.

This is a fundamental economic crime to the survival of businesses in Ghana and to the essence of sustaining the economic livelihood of the citizens. We as Bastiat Ghana emphatically indicate whether there is monetary policy tactics abuse or BOG is lost in it policy direction.

According to Bank of Ghana Report on 11^th September, 2015 following monetary policy committee meeting, it increased its monetary policy rate from 24% to 25%. We further ask BOG, Knowing it direction of Policy, why has it permitted Central Government persistent increased in borrowing without setting a fiscal straight jacket for central government as at now, which clearly contravene the theoretical approach adopted, which it further breach, has a die consequential effect on businesses and grassroots citizen livelihood. We therefore appeal to the heart and mind of Ghanaians that the Present economic turmoil is just an abuse of policy direction.

CAUTION
We could be questioned by certain circles as of what legislative right do we have as Bastiat Ghana to criticize and offer solutions to present economic pandemonium of Ghana.

Our present in Ghana was to fight for the economic freedom of our people regardless of any force existing and we prefer the force never be internal but rather external but unfortunate it becoming otherwise. And in our attempt to be slow in responses in some of this macroeconomic measurement is not an oversight but to respect it experimental output for adjudication.

And should be put onto record our effort is to put sanity into the intellectual platform of Ghana and Africa. Which underscore the fact that, activities lacking a sound theoretical perspective for vibrant economic growth but rather place at the whim and caprices of individual idiosyncrasy will be exposed and caption for simple and easy understanding of the populace

“The Inflation Outlook and Risk Assessment Report of BoG Under critical scrutiny in the Laboratory of Bastiat Ghana will be released soon to the press.

EFFECT TO JOB EMPLOYMENT
The present monetary and fiscal policy formula applied which is only understood by Bank of Ghana; to we Bastiat Institute deduce that it has only one economic effect that is scientifically justifiable; which is collapsing of more businesses that could not survive in the test of time and increasing of unemployment.

Present economic effect speaks for itself and expectation is that, it will not be better but will get worst that is not a spiritual prophecy but a scientific deduction of present module in application. In our attempt to search and review an independent labour statistical report of republic of Ghana, our effort prove futile, which we suggest to government to set up a Burea of Labour Statistics, an Independent body legislated to build the government library with necessary knowledge of labour statistics because our findings on the status of employment ecosystem of Ghana is very dangerous in the near future ahead, which government has to pay serious attention, beyond political promises and interest.

We rather realized that a comprehensive data report of Ghana statistical board capture few studies on the labour dynamics in the country stemming from 2000 and 2010 censures report.

We could not make any scientific analysis and projection counting on any reliable methodology because figures presented by GSS (2010) on labour statistics undermine the theoretical foundation of labour economic as archival report from other sources questioning the meaningful nature of such figures for scientific deduction.

This resulted in ignoring further studies in such area for comparative analysis based on our present report on the state of unemployment status in Ghana as at September 2015.

CONCLUSION

• This paper seek to establish that, the unemployment status is going to heighten beyond what we could imagine from now to 2016, even when the IMF policy application is to be relieved, it will still take a divine intervention

• We therefore humbly request Bank of Ghana to allow Intellectual Sanity to prevail in it economic policy construction and theoretical frame work of operations to guide the business economist for reliable econometrical forecasting as a guarantee to protect the future of companies they consult

BANK OF GHANA OBJECTION TO OUR SCIENTIFIC POSITION
If Bank of Ghana object to our present position into the analysis of the policy application, we humbly request them to present to Ghanaians the kind of economic effect to anticipate for short, medium and long term of their kind of policy application in existence, in a clear understanding to the ordinary Ghanaian, and as a social science experiment; the market will determine with respect to time to find out whether they are right and we are wrong or vice versa.

Emmanuel Tweneboah Senzu, PhD.
Executive Director
Bastiat Ghana Institute
[email protected]