Ghana’s central bank had on Monday, July 24, called for a stricter fiscal policy to help reduce its stubbornly high inflation as it skyrocketed its main interest rate by another 50 basis points to 30.0%.
The oil-cocoa-gold-producing West African nation is struggling with its harshest economic crisis so far, in a generation. The situation has been characterised by a double-digit inflation and surging public debt.
So far, the country has secured a $3 billion support package from the International Monetary Fund (IMF) conditional on debt restructuring.
Ernest Addison, the central bank governor had meanwhile on Monday, remarked that the latest interest rate hike was essential to prevent a disinflation trend from being blown off course.
Addison had said in the news conference:
“The fiscal policy will keep on getting tighter until the inflation is where we want it to be. However, we also cannot look at it in isolation, because the monetary policy alone will not be able to deliver that low inflation.”
Ghana’s central bank has been increasing its rates since late 2021, although it had halted at a few meetings during its skyrocketing cycle.
The central bank governor’s statement on the necessity for a fiscal ‘reinforcement’ is coming as Finance Minister, Ken Ofori-Atta, is geared to present his mid-term budget review in parliament on Tuesday, July 25.
Addison has also revealed that that the central bank would, in the coming months, carefully look into inflation data and respond as necessary.
Addison had then ended his statement by remarking that he was not sure that the Ghanaian government would formally engage its bilateral creditors yet on debt restructuring.
