The Technical Advisor to the Vice President, Dr. Tiah Abdul-Kabiru Mahama has described the rise and fall of the current inflation rate and cedi against the dollar as a positive growth.
During his appearance on the August 1, 2023 edition of Metro TV’s Good Morning Ghana, Dr. Tiah Abdul-Kabiru Mahama explained that December 2022 saw the inflation rate at 54% however, that has had a significant decrease that is worth mentioning.
According to him, if Ghana is having an inflation rate of 54% and the government is working to reduce it to 42%, and the Finance Minister is the first person to admit that the inflation rate of 42% is not something to celebrate, it is a testament that it is on a path to recovery.
To support his arguments, he explained that “the exchange rates are very sensitive and any shock is likely to feed in into the figures you have, for instance, if you have a particular month that you see that your exchange rate depreciation is moving up, you are likely to have the inflation rate also going in the same direction.”
Additionally, “when the structure of the economy is highly commodity-based and so much informal, it is difficult for you to compete in terms of currency trading with any other of the major currency, especially when you have a currency like the USA dollar, the Pounds Sterling.”
Despite the current exchange rate not being in the ideal state Ghanaians wish it was, Dr. Mahama believes the current situation is one that needs a tap at the back.
CONTEXT
While delivering the 2023 Mid-Year Budget Review in Parliament on July 31, Finance Minister Ken Ofori-Atta said Ghana is making modest gains in turning the economy around after facing severe economic hardships in 2022.
Mr. Ofori-Atta emphasized that the government’s policies and programs are beginning to bear fruit, and he urged the public to recognize the key milestones reached in the last three years.
“Over that period, the country has gone through extremely difficult situations, and the gratitude of His Excellency the President and his government goes to the good people of Ghana for their patience, understanding and positive contributions to Government’s efforts to weather the storm.
“Mr. Speaker, we have turned the corner and, more importantly, we are determined to continue down that path. Soon, we expect the measures taken to result in economic activity greater than anything experienced in the history of the Fourth Republic. Our plans and programmes should soon lead to a sustained increase in domestic production, including manufacturing and farming, replacing many of the products that we are used to importing.”
“As I have indicated, we have made significant progress on restoring macroeconomic stability and the narrative is changing. The economy is showing signs of recovery. The exchange rate has stabilised, inflation has softened, and interest rates have declined since December 2022.”
However, the Minority Leader, Cassiel Ato Forson described the claims by the Finance Minister as “false” and “misleading”.
According to him, the woes of Ghanaians have actually deepened under President Nana Addo Dankwa Akufo-Addo’s administration.
Dr. Ato Forson maintains that the evidence and numbers show differently.
He raised a number of issues with the situation of the economy today. For instance, he cited a downward revision to economic growth from 2.8% of GDP to 1.5% of GDP, showing a slower recovery than previously thought.
“The performance so far shows that we have turned the corner. Unfortunately, the evidence and the numbers before us, show us that he has rather deepened our woes,” Cassiel Ato Forson said.
“I say this because he has said to us today that he’s revising economic growth from 2.8% of GDP to 1.5% of GDP. Again, he said to us here and now that he has borrowed 5.5 billion Ghana cedis from January to June, from the T-Bill market. Mr Speaker, not long ago, this same Minister informed us that he will not borrow at all in the year 2023. And that going into the remaining parts of the year, he is going to borrow another 41 billion Ghana cedis.”
“Aside from that, the Cedi depreciation we are seeing so far, it’s largely because we have defaulted in the payment of external interest and principal. That is why the cedi has depreciated.”
By: Akua Karle Okyere Metrotvonline.com | Ghana
