‘Ghana needs risk management framework’

… Former Deputy BoG Governor recommends

Former Deputy Governor, Bank of Ghana (BoG), Dr. Johnson Asiama has recommended the need for Ghana to have an elaborate risk management framework going forward.

In a roundtable discussion, on Ghana’s Public Debt, Dr. Asiama explained that, “for the sake of long-term debt sustainability, if we can have a risk matrix, a matrix of all things that affect us as a country so that continuously, we are building the necessary mitigating measure.”

Once the country’s risk management framework is established, and the risk appetite and limits are set, exposures will be measured, monitored and managed. What is the risk that confronts us? Asiama asked.

He said, “Looking at the externals in terms of our reserves; it is true that our reserve levels have gone up, but when you take our entire liabilities as a country and benchmark that with the level of reserve, then the story is not exactly as buoyant as you would want it to be.”

The country expects growth to accelerate this year on the back of oil, among others, as the macro-economic numbers last year was good.

“But down the road, just let the rains delay up to August and you would see the story would change,” Asiama noted.

“To put it into context; if you cast your mind back to the time of the Asian financial crisis, most of those countries had in excess of six months of import cover, and yet when the crisis hit, it wasn’t enough,” Asiama cited.

So if you have four month or so, it’s good enough but it should actually be a lot better, he elaborated.

“Let’s have a list of all the factors that are able to suddenly change the game such as prospect of another energy shock; you would agree with me that this is not far-fetched.”

It starts as an exogenous shock, but it work its way into a macro-economic shock and then the fiscal is always where it ends at, Asiama noted.

“Each day, let’s be convinced that we have each of these well covered, which is the only way we can assure our longer term sustainability prospects.”

By Joshua W. Amlanu