Professor William Baah Boateng, an economics lecturer at the University of Ghana, has attributed the recent calm in the macroeconomic space and the appreciation of the cedi to the government's strategic management of expenditure, rather than deep cuts in government spending.

In an interview on Joy News' PM Express Business Edition on Thursday, May 8, Professor Baah Boateng clarified the government's approach to fiscal management, emphasizing that the current improvements in Ghana’s economy are not the result of drastic budget cuts, but rather of careful management of where and how government funds are allocated.

“Government is not cutting expenditure,” he stated. “We have to differentiate between cutting expenditure and managing expenditure.”

Professor Baah Boateng explained that the government's fiscal approach is centered on ensuring that expenditure aligns with productive activities within the economy, rather than slashing budgets.

“Government has tried to make sure that the expenditure it is going to incur will be expenditure supported by economic activity,” he noted. “That helps in taming the fiscal side, and then its benefits go to the exchange rate and the monetary side.”

This shift in expenditure management, according to Professor Baah Boateng, has also allowed the Bank of Ghana to work more effectively. He pointed out that in previous years, the central bank was often forced to intervene to manage the fallout from poor fiscal discipline.

“The central bank will not be worried so much about seeing how they can clear the mess,” he said. “In 2022 and 2023, we were all saying that what is happening is coming from the fiscal and monetary policy will have to come in and clear the mess. Now, if fiscal is putting its acts together, then it means the mess will not be there for the central bank.”

Professor Baah Boateng commended the central bank for adopting a more measured approach to monetary policy, describing it as "wise."

“What I see the central bank doing is watching and seeing how things are unfolding,” he explained. “There’s no economy that has demand and supply doing everything. There’s always some regulation.”

He emphasized that the government’s focus on managing expenditure means prioritizing public investment, rather than cutting it altogether.

“You may think, well, ministers have been reduced to 57. There are so many other things the government has done by trying to manage its expenditure. And this is what some of us have been talking about,” he said.

While acknowledging the recent improvements in the exchange rate, Professor Baah Boateng warned that these gains should not be seen as a sign of fundamental changes in the structure of the economy.

“When you look at the structure of the economy, we still have the same structure as it used to be last year,” he said. “But something is happening in terms of the fiscal.”

In response to a statement made by a representative from the Ghana Union of Traders Association (GUTA) expressing optimism about the cedi’s appreciation, Professor Baah Boateng urged caution.

“I’ll be happy if he says that when the dollar goes down, he will reduce his prices accordingly,” he said. “But if that’s not going to reflect in the domestic market, then we have to be very careful.”

He concluded with a broader economic perspective, highlighting the need for regulation in any economy: “There is no perfect market. No extreme monopoly. No economy works purely on demand and supply. There’s always some element of intervention.”