Economist laments BoG’s failure to rein in black market forex trade

Economist and Director of the Institute of Statistical, Social and Economic Research, Prof. Peter Quartey, has expressed concern over the Bank of Ghana’s apparent inability to curb the thriving black market for foreign exchange, which he believes is significantly contributing to the depreciation of the local currency.

Speaking on the issue, Prof. Quartey highlighted the central bank’s struggle to control the informal forex market, which he argues often dictates exchange rates. “One puzzle I have with central banks is their inability to address the black market problem, the informal forex issue,” Prof. Quartey said. “Sometimes it looks like they dictate the price on the market. That’s where trading takes place, and speculation and other activities are rampant.”

Prof. Quartey questioned whether the central bank lacks the mandate or the capacity to tackle the issue effectively. He noted the ease with which individuals can obtain foreign currency through informal channels, often delivered via motorbikes (Okada). “These days, you can make a phone call and then they will bring you forex on Okada,” he lamented.

In addition to his concerns about the black market, Prof. Quartey addressed the country’s ongoing inflation challenges. He emphasized that inflation is not solely a monetary phenomenon but also has significant supply-side factors. “It doesn’t mean that the money supply issue should be ignored, for sure,” he added.

To combat inflation more effectively, Prof. Quartey called for improved coordination between fiscal and monetary authorities. He stressed the need for the Ministry of Finance and the central bank to work together, addressing both demand and supply-side factors. “The fiscal authorities, the Ministry of Finance, you know, they also have to do what it takes,” he said. “Whilst they are fighting it from the demand side as much as possible, finance is also addressing the issue so that, you know, together we are able to address the inflation problem.”

Prof. Quartey’s comments come at a time when Ghana is grappling with economic instability, and his call for greater synergy between fiscal and monetary policies underscores the need for a holistic approach to address the nation’s economic challenges.

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