Ghana's economy shows signs of price stability

Ghana's economy has been showing positive signs of price stability, with the Bank of Ghana Monetary Policy Committee maintaining its main interest rate at 30 per cent in September. The West African country has been able to ease off inflationary pressures by 300 basis points in August, thanks to a successful food harvest season. Kofi Koduah-Sarpong, CEO of Sarpong Capital, shared his insights on the progress of inflation and the overall economic performance of Ghana. Koduah-Sarpong expressed optimism in the downward trend of inflation and believed that it had already peaked for the year, converging towards the monetary policy rate. However, he highlighted potential risks such as rising oil prices and expected utility tariff increases in the country. Despite these challenges, the government is focused on improving revenue collection to address fiscal concerns. The Bank of Ghana aims to bring inflation down to the 30% region by the end of the year, aligning with efforts to turn negative real interest rates into positive figures. Ghana's economic performance has surpassed initial predictions, exceeding both IMF estimates and the government's revised figures, showcasing resilience and growth. Koduah-Sarpong noted that while the Composite Index of Economic Activity has shown an uptick, contributing to currency stability, ongoing economic conditions could influence the currency's future trajectory. Reflecting on significant developments within the year, including the IMF bailout and domestic debt exchange, Koduah-Sarpong emphasized the successful restructuring of domestic debt objectives. However, concerns linger around communication with external creditors, warranting clarity and transparency in ongoing debt management processes. Despite fluctuations in capital adequacy, banks in Ghana have demonstrated solid profitability post-exchange program, indicating financial resilience and adaptability. With public debt accounting for about 71% of GDP, Ghana continues to rely on borrowing to finance governmental activities, particularly through short-term domestic treasury operations. While public debt may increase in the near term, efforts to meet restructuring goals and optimize borrowing strategies are expected to drive a gradual decrease in the future.