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Page 1. CREDIT SUPPLY, MONETARY POLICY AND STRUCTURAL ADJUSTMENT IN GHANA Martin Brownbridge1 UNC... more Page 1. CREDIT SUPPLY, MONETARY POLICY AND STRUCTURAL ADJUSTMENT IN GHANA Martin Brownbridge1 UNCTAD, Geneva. 1. Introduction One of tne principal objectives of the structural adjustment programmes ...

The Botswana journal of economics, 2007

In this valuable new book, a distinguished group of authors takes stock of the existing state of ... more In this valuable new book, a distinguished group of authors takes stock of the existing state of knowledge in the field of finance and the development process. Each chapter offers a comprehensive survey and synthesis of current issues. These include such critical subjects as savings, financial markets and the macroeconomy, stock market development, financial regulation, foreign investment and aid, financing livelihoods, microfinance, rural financial markets, small and medium enterprises, corporate finance and banking.

Several members of the Commonwealth of Independent States (CIS) rely heavily on remittances sent ... more Several members of the Commonwealth of Independent States (CIS) rely heavily on remittances sent back by migrant workers, mainly in the Russian Federation, to support household incomes and the balance of payments. Tajikistan is the most heavily dependent of the CIS countries on remittances, followed by Moldova and the Kyrgyz RepublicThis note analyses the macroeconomic impact of the fall in remittances in the Kyrgyz Republic and Tajikistan, the two smallest and poorest (in terms of per capita incomes) economies in the CIS. The following section (section 2) provides some background material on the growth of remittances and the contribution that they have made to the Kyrgyz and Tajik economies. This is followed by the third section which examines how they adjusted to the fall in remittances. The fourth section concludes.

This paper applies a VAR framework to analyze exchange rate pass-through to domestic inflation in... more This paper applies a VAR framework to analyze exchange rate pass-through to domestic inflation in Uganda. The results show that the pass-through indeed exists. Both nominal exchange rates depreciation and the increase in short-term interest rates have a significant and persistent impact on domestic consumer prices, but the impact of the nominal exchange rates shocks on prices are larger and faster than the monetary policy shock. The paper also finds that monetary policy seems to have little impact on real output. In terms of policy response, the paper argues that the existence of pass-through raises important policy questions for a central bank whose primary policy objective is to control inflation, but is also concerned with output stabilization. Because an exchange rate shock, which raises inflation, generates a potential conflict with the primary goal of the central bank.

Development Policy Review, 2002

Research Papers in Economics, 2021

The deep recession in many of the emerging market transition economies of Europe and Central Asia... more The deep recession in many of the emerging market transition economies of Europe and Central Asia caused by the COVID-19 crisis has raised fears of long-term damage to potential output through scarring and hysteresis. These economies were also hit hard by the great recession caused by the global financial crisis. This paper provides empirical estimates of the impact of the great recession on the subsequent medium-term level of real gross domestic product in a sample of 65 middle-income countries. It finds evidence of a significant hysteresis parameter in these countries. The paper also examines how the combination of a hysteresis parameter and a positive fiscal multiplier can mean that a countercyclical fiscal expansion that successfully mitigates the output loss in a recession need not worsen public debt levels in the medium to long term because of its positive impact on potential output and thus the tax base.

Oxford Scholarship Online, 2018

The Bank of Uganda introduced an inflation targeting (IT) monetary policy framework in 2011, repl... more The Bank of Uganda introduced an inflation targeting (IT) monetary policy framework in 2011, replacing a decades-old money targeting framework. This chapter reviews Uganda’s experience and concludes that an IT framework is feasible for Uganda, despite shallow financial markets, volatile exchange rates, supply price shocks which make inflation more volatile and difficult to forecast, and lack of data. Key prerequisites were the operational independence of the central bank and the primacy of the core inflation objective for monetary policy. The successful adoption of IT in Uganda depended on the adoption of a set of basic principles, including: the primacy of the inflation forecast in setting policy; the separation of monetary from fiscal operations; the adoption of a short-term interest rate as the sole operating target, rather than e.g. a mix of interest rates and monetary aggregates; and an emphasis on clear communications.

Ghana has implemented a financial sector reform programme since the late 1980s. The banking syste... more Ghana has implemented a financial sector reform programme since the late 1980s. The banking system had suffered severe shallowing together with widespread bank distress as a consequence of the pre-reform policies of financial repression, government control of banks and the prolonged economic crisis. The financial sector reforms included the liberalisation of allocative controls on banks, restructuring of insolvent banks and reforms to prudential regulation and supervision. This paper examines why the banking system in Ghana was in need of reform in the 1980s and evaluates the impact of the financial sector reforms. The conclusion reached is that while the reforms have brought about improvements in the banking system-banks are now more prudently managed and supervised-major constraints to efficient financial intermediation remain, not least macroeconomic instability and the still very shallow nature of financial markets. 1 At the time of writing M. Brownbridge was at UNCTAD, Geneva and A. F. Gockel was with the Economics Department of the University of Ghana, Legon. The authors thank Sammy Gayi and Charles Harvey for invaluable comments but accept responsibility for all errors.

The banking system in Uganda is among the weakest in Sub-Saharan Africa. Its liabilities comprise... more The banking system in Uganda is among the weakest in Sub-Saharan Africa. Its liabilities comprise less than 10 per cent of GDP, it is highly oligopolistic and inefficient in performing many basic banking functions, and the largest bank and several smaller banks are insolvent. The financial policies of the pre-reform period aimed to control banking markets, ostensibly for developmental and other non commercial objectives. These policies had very damaging effects on the banking system. Financial repression deterred the public from holding bank deposits. A large government owned bank was operated with very little regard for commercial principals and accumulated a massive portfolio of bad debts as a result. The role of the foreign banks, which at least provided a basic, if limited, range of banking services, was sharply curtailed when they sold most of their branches to the public sector banks. The neglect of prudential regulation allowed mismanagement to become widespread, not just in the government banks but also among some of the newer banks established in the late 1980s by the private sector. The financial sector reforms of the 1990s are intended to remedy the consequences of the previous two decades of misguided financial policies. The second contention of this paper is that these objectives are likely to prove very difficult to attain because of the scale of the problems which the banking sector inherited from the pre-reform era, and especially because of the dominant market position of the public sector banks.

The strategy for expanding public services through donor funding is flawed and is doomed to fail.... more The strategy for expanding public services through donor funding is flawed and is doomed to fail. Donor funding necessitates increased internal public expenditure. This shifts resources away from the export-oriented private sector, which would bring about economic growth and provide a basis for a more comprehensive poverty reduction. There are also absorptive limitations in the use of large donor aid. Donor funds distort Government's budget allocation pattern, cohesion and stability. The funding gap envisaged under MDGs by donor aid advocates ranges between 6.4% to13.6% of Uganda's GDP, which are enormous. Large donor aid will lead to contraction of the private sector, appreciation of the shilling and falling prices of agricultural produce. It would mean that the Government would have to depend on donors for over 60% of its budget. And yet donor funding is volatile and unpredictable. The strategy of achieving MDGs through large donor aid should be abandoned. Instead, as proj...