The Governor of the Bank of Ghana (BoG), Dr Johnson Asiama, has assured the public that the central bank is well prepared to manage any liquidity and inflationary risks that may arise from the government’s ambitious infrastructure drive under the Big Push agenda.
According to Dr Asiama, while large-scale infrastructure spending is expected to inject significant liquidity into the economy and boost demand, its effect on inflation will largely depend on how the expenditure is financed, timed, and absorbed by the economy.
He explained that increased public spending does not automatically translate into runaway inflation, stressing that careful sequencing and financing are critical to maintaining macroeconomic stability.
“The Bank recognises that a scale-up in infrastructure spending can increase liquidity and demand pressures in the economy. However, the inflationary impact will depend critically on how this spending is financed, paced, and absorbed by the economy,” the Governor said.
Dr Asiama noted that recent disinflation trends have created some room for cautious monetary easing. However, he emphasised that the Bank of Ghana’s policy stance remains sufficiently tight to protect price stability. He added that the Monetary Policy Committee (MPC) will continue to closely track economic developments and act swiftly to keep inflation within the targeted range.
“To manage potential inflation risks, the Bank will continue to deploy a prudent and forward-looking monetary policy stance,” he stated.
The Governor also highlighted the need for strong coordination between fiscal and monetary authorities, particularly regarding the timing and financing of major infrastructure projects, to avoid placing excessive pressure on the economy.
Additionally, Dr Asiama assured that the central bank stands ready to use open market operations and other policy tools to mop up excess liquidity when necessary. This, he said, underscores the Bank of Ghana’s commitment to safeguarding macroeconomic and price stability as government infrastructure spending intensifies.
