Economics

The IEA continues to undertake studies on wide-ranging areas that respond to the dynamics of the economy.

Macroeconomic Stability and Debt Sustainability

Over the past few years, macroeconomic stability and debt sustainability have constituted key components of IEA research, given their importance for sustained growth. Among others, The IEA’s research has focused on Monetary Policy and Inflation Dynamics, the Macroeconomic Implications of High Fiscal Deficits, Exchange Rate Policy and Dynamics, Debt Profile and Sustainability, and Budget Preparation, Implementation and Oversight. Based on the results of its research, The IEA continues to call for further strengthening of inflation management, strengthening of budget controls and oversight to reduce budgetary overruns, entrenchment of fiscal discipline, including through passage of a Fiscal Responsibility Law, and ensuring transformation of the economy to underpin exchange rate stability.

Financial Intermediation

Our research and advocacy have drawn attention to the low financial intermediation and the high cost of credit in Ghana, which have adversely affected investment and economic growth.  In a recent research paper in this area we recommended better regulation of the financial sector, a call that led to the Governor of the Central Bank, at the instance of the late President Mills, instituting guidelines for setting the banks’ base lending rates. Subsequently in 2014, The IEA also called for measures to deepen financial intermediation and to make credit affordable to the private sector and SMEs in particular, recommendations that were well received, especially among the business community.

Oil and Gas Sector

With the advent of oil and gas in Ghana, we undertook significant research and advocacy so as to promote good governance in the sector through transparent, accountable and efficient management of revenues. Our research in this area concentrated on developing and applying an index for tracking transparency and accountability in the oil and gas sector. This index, the Petroleum Transparency and Accountability (P-TRAC) Index, has been applied to Ghana. Our recommendations include the following:

• Bills Proposed
  • The Ghana Extractive Industries Transparency Initiative Bill – Passed
  • Right to Information Bill – Pending
  • The Local Content and Local Participation Bill – Passed
  • The Petroleum Exploration and Production Bill – Pending
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• The Auditor General should publish audited reports of Ghana Petroleum Funds – Implemented.
• Relevant Parliamentary Committees and the Public Interest and Accountability Committee (PIAC) should be resourced to enable them carry out their mandates effectively – Not Implemented.

Other Natural Resources

The IEA has led sustained advocacy to ensure fair taxation of the mining sector in the light of the sector’s limited contribution to government revenue. This advocacy culminated in The Institute’s drafting of a paper on Windfall Profit Tax in 2011 for consideration by government and key stakeholders. The then Minister of Finance, Dr. Kwabena Duffuor, mentioned these recommendations in his budget statement to Parliament. Unfortunately, these recommendations have not been implemented.

Economic Transformation and Self-sufficiency

Recognizing the importance of transforming the Ghanaian economy so as to achieve self-sufficiency as a means to sustaining Ghana’s development and poverty alleviation, The IEA focused its research on issues relating to mitigating the adverse effects of economic liberalization, reducing aid dependency by exploring alternative resources, transforming the Ghanaian economy from its “colonial structure,” and improving Ghana’s socio-economic conditions commensurate with its new middle- income status. These studies have helped influence the thinking of politicians and policymakers on the need to diversify the colonial primary raw material-based economy to a more industrialized and competitive one.

Contribution to the Work of the Monetary Policy Committee (MPC) of the Bank of Ghana and the Public Interest and Accountability Committee (PIAC) of the Oil and Gas Sector

In the last two years, The IEA has had the unique privilege of being represented on the Monetary Policy Committee (MPC) and the Public Interest and Accountability Committee (PIAC) of the Oil and Gas Sector. The IEA has used its membership of these Committees to espouse and advocate for policies in oil and gas governance and general economic management backed by The Institute’s research work.