Ghana inflation slows after 20-month surge
Ghana's consumer inflation has dropped slightly to 53.6 per cent year-on-year in the month of January, marking the first month inflation has slowed since May 2021. Meanwhile, Ghana’s Finance Minister is appearing before parliament today to answer questions on the Domestic Debt Exchange Programme. Richmond Frimpong, a Financial Advisory Consultant joins CNBC Africa for more on these.
Thu, 16 Feb 2023 12:13:58 GMT
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AI Generated Summary
- Ghana sees its inflation rate drop slightly to 53.6% year-on-year in January, marking the first decrease since May 2021. While this decline may reflect some positive impact of economic policies, experts caution that challenges like high food inflation persist.
- The Finance Minister's appearance before parliament to discuss the success of the Domestic Debt Exchange Programme, which achieved an 85% subscription rate, highlights the importance of effective debt management strategies in Ghana's economic recovery.
- MTN's decision to invest one billion in Ghana following the resolution of tax claims by the government underscores the significance of maintaining a favorable investment climate to attract foreign businesses and stimulate economic growth.
Ghana's consumer inflation has experienced its first drop in 20 months, decreasing slightly to 53.6 per cent year-on-year in January. This decline, the first since May 2021, has prompted discussions about the effectiveness of recent policy moves by the Finance Ministry. Richmond Frimpong, a Financial Advisory Consultant, shared insights on the situation. Frimpong highlighted that while the decrease in inflation could be seen as a positive sign, it might be premature to attribute it solely to government policies. He pointed out that the reduction in inflation was likely more due to a slowdown in demand as consumers cautiously monitor Ghana's progress on the domestic debt exchange. The stabilization of the forex exchange rate has also played a role in easing inflationary pressures. However, Frimpong warned that food inflation remains high at 61%, indicating that significant inflationary pressures persist. Despite the ongoing efforts to address excess supply in the system and reduce supply side pressures through monetary policy, challenges remain, especially in the fiscal sector. As Ghana's Finance Minister appeared before parliament to discuss the Domestic Debt Exchange Programme, Frimpong emphasized the importance of the minister's recent success in achieving an 85% subscription rate for the program. The positive outcome of the debt exchange could influence how the minister's presentation is received by lawmakers. Frimpong suggested that the minister's explanation of the program's impact and future debt management strategies would be crucial in guiding Ghana's economic direction. Additionally, Frimpong commented on MTN's plan to invest one billion after the government waived tax claims. He noted that the government's strategic approach in resolving the tax issue with MTN had paid off, leading to the telecom company's commitment to significant investments in the country over the next five years. The diplomatic handling of the tax dispute showcased the importance of maintaining a conducive environment for foreign investments in Ghana.
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