Adnan Adams Mohammed
The Ghana Union Traders Association (GUTA) has cautioned the government against complacency despite the recent decline in inflation.
Traders, who are hardly hit with inflation surges as it erodes working capital, have called for continued vigilance and proactive measures, although, acknowledging the positive progress of inflation from 54.1% in December 2022 to 26.4% in November 2023.
The call comes at the time the Finance Minister, Ken Ofori-Atta, is celebrating the collaboration between the Treasury and the Bank of Ghana which has led to the halving of inflation from a peak of 54.1% to 26.4%.
“We should not be complacent, especially when the second tranche of the IMF loan hasn’t come in. If it comes within time, we can sustain the gains we have gotten so far. We must be serious in managing our monetary business to maintain the current inflation rate,” the President of GUTA, Dr. Joseph Obeng, said in an interview last week.
“The inflation was at 54.1%, the exchange rate was very high. In the last quarter of 2022, we experienced large rates of depreciation. When the first tranche of the IMF loan of $600 million came, we experienced long-term stability of the cedi. I think that is what is doing the magic of pulling the money down. Inflation has been at 54.1%, and it’s seeing a current decline of 26.4%. Once inflation is declining, we should be seeing the effects of that in the market. Are we seeing that?”
He anticipated a lower monetary policy rate to help cushion businesses.
“We should expect the monetary policy rate to come down, along with inflation so that the cost of borrowing and other costs of doing business can come down too. Then inflation can come down to the barest minimum to help both the consuming and the trading public.”
Finance Minister Ken Ofori-Atta recently attributed the consistent decline in inflation to the government’s dedicated efforts in restoring macroeconomic stability.
At the Bank of Ghana’s End-of-Year Cocktail last week, Mr. Ofori-Atta said: “Together, we have strived to reset our financial architecture”.
“And despite the challenges over the last three years, I am proud that we have ‘turned the corner’ toward a more robust and transformed economy”, he added.
Mr Ofori-Atta said: “Indeed, amidst these trials, our united front in managing the Bank of Ghana’s balance sheet has been nothing short of heroic.”
“More importantly, the Ghana Statistical Services (GSS) reported that inflation has slowed down to 26.4% in November 2023 from 35.2% in October 2023”, he pointed out, adding: “In effect, the Bank and the Treasury’s collaborative efforts have halved inflation (from 54.1% in December 2022) in under 12 months”.
Mr Ofori-Atta said while it is a welcome news that prices are no longer rising as quickly, “We know many people continue to face severe cost of living pressures. So, we must stay the course to continue to get inflation back down to single digits as quickly as possible”.
He noted: “We must never forget that our work is vital not just for the present but also for the future of Ghana. And, so, though our journey is far from over, and the road ahead will require continued perseverance and unity, I am confident that we will not only prevail but also propel Ghana towards a more prosperous future”.
Mr Ofori-Atta said 2024 should be a period in which “we must continue to push boundaries, work with equanimity, and dispel any cloud of nihilism to guarantee economic freedom and social mobility for all”.
Also, the President, Nana Akufo-Addo commended the Bank of Ghana for its role as a reliable custodian of the nation’s finances, an efficient currency manager, and a vital lender of last resort.
President Akufo-Addo highlighted the BoG’s pivotal role during the COVID-19 pandemic, citing the institution’s collaboration with commercial banks to institute a GHS3 billion credit and stimulus package. This initiative aimed to rejuvenate industries, particularly in the pharmaceutical, hospitality, and manufacturing sectors, yielding positive effects on the country’s economic growth.
Recalling the challenges faced upon assuming office in 2017, President Akufo-Addo acknowledged the distressed state of the banking industry. He praised the BoG’s intervention under new leadership, emphasising the restoration of stability and sanity to prevent the collapse of the financial sector. The President noted the successful cleanup exercise, which safeguarded the funds of 4.6 million depositors and utilised GHS21 billion from government funds.
In addressing the economic impact of the COVID-19 pandemic and the Russia-Ukraine conflict, President Akufo-Addo credited the BoG for playing a crucial role in restoring macroeconomic stability. He highlighted a significant drop in inflation from 54% in December 2022 to 26.4% in November 2023, as well as sustained stability in the exchange rate.
Underscoring the BoG’s support for the government’s economic diversification and transformation process, its partnership with the International Monetary Fund (IMF) and the implementation of corporate governance measures to prevent future bank failures, ensuring a robust banking sector.
While acknowledging the BoG’s contribution to the digitisation of the economy, emphasising the transformation of the payment system, and enhanced financial inclusion, the President called for stronger partnerships and enhanced policy coordination between the BoG and the Ministry of Finance to address current economic challenges and facilitate the desired economic transformation.