Economy Forward

  I thought of writing this article no sooner I saw a social media video clip attached here (CB at COPF).  It is a part of the CB Governor pleading the permission of the Chairman of the COPF to pay salaries to staff for the month of March at rates agitated by both Parliament and general public. This shows how the CB Governor attempts to clicking on to politics to save his public seat in contravention of central bank governance standards. Article's Background In my book "Innovating Central Banks" released in March 2018, the Part II was allocated for "Central Bank Governance: Public Trust and Survival." Under the Part II, Chapter 6 presented "Issues in Central Bank Governance" from selected countries. This included extraordinary acts of Governors of Reserve Bank of India (RBI) and Bank Negara Malaysia (BNM) to protect the independence by stepping down from respective public seats. Both emanated from the policy conflict between the central bank and govern...

  Articles' background I happened to read an article published in the GhanaWeb on 20 March 2024 on views expressed by IMF Managing Director Ms Kristalina Georgieva at her visit to Ghana as part of IMF surveillance on its loan programme (read the article here) . Ghana confronted an economic crisis similar to Sri Lankan crisis (debt, foreign currency, high inflation and contraction) and secured a 36-month IMF loan programme of US$ 3 bn in May 2023 with similar conditions imposed in Sri Lankan programme.  Ghana has so far received US$ 1.2 bn as first two tranches and the 2nd review is expected in April 2024. However, the core of the programme, debt restructuring, is still in the deadlock without any confirmation of the prospective date and the quantum of restructuring agreement with official and private creditors. Therefore, this article is a short presentation of the questionability of IMF programmes in the present status of Ghana and other crisis-hit countries. Views of IMF Man...

  The Bank of Japan (BOJ), the Japanese central bank, today (19 March 2024) announced a landmark change in its monetary policy by raising the policy interest rates first time in 17 years along with several tool amendments to its monetary policy.  Therefore, the purpose of this article is to express my views that the BOJ decision today is another point in its monetary policy blunder that has existed miserably in the past 30 years to get the economy out from deflation trap. BOJ monetary policy focus - Inflation control In line with the old tradition of central banks, the BOJ also follows monetary policy to drive inflation towards a target in the medium to long term. For the past two decades, its inflation target has been 2% parallel to other developed countries. However, Japan has been confronting a deflation trap during the past 2-3 decades. Therefore, unlike in other countries, the BOJ has been pursuing the monetary policy to boost inflation. Inflation in Japan For this purpos...

  IMF bailout programme for Sri Lanka We all know that Sri Lankan Parliament has approved the IMF financial programme 2023-2026 as the only option available to rescue the country from its economic crisis.  As per programme information, it rests on six pillars listed below. Advancing Revenue-Based Fiscal Consolidation, Reforms to Social Safety Nets, Fiscal Institutions, and State-Owned Enterprises Restoring Public Debt Sustainability Restoring Price Stability and Rebuilding External Buffers Ensuring Financial Stability Reducing Corruption Vulnerabilities Raising Potential Growth All these pillars are required to be constructed and fortified by a large number of policy actions. Whether such policy actions will guarantee the resolution of the economic crisis is a separate subject to be studied at the progress review of the programme implementation. Key direct stakeholders of the IMF programme are the Ministry of Finance, Central Bank, Cabinet and Parliament. The...