Can Ghana sustain inflation slowdown in 2024?

Ghana's headline inflation slowed to 23.2 per cent in December 2023 sustaining a slowdown for five consecutive months. Can the country keep up the momentum in 2024? Richmond Frimpong, Advisory Board Chair at FLF AFRICA fNGO, joined CNBC Africa to discuss the December inflation figures and share insights on the country's economic outlook for the year. Frimpong noted that the continuous decrease in inflationary pressures is a positive sign, attributing it to the synchronization between monetary and fiscal policies. He emphasized the importance of maintaining this balance to ensure sustainable economic growth. With the Bank of Ghana's upcoming meeting, Frimpong suggested that the institution should carefully consider scaling back its policies while keeping an eye on government's fiscal position. Looking ahead, Frimpong projected a lower average inflation rate for 2024 compared to previous estimates, citing factors such as the ongoing election year and adherence to IMF program guidelines. He expressed confidence in managing inflation amidst election year pressures due to strict fiscal monitoring under the IMF program. The ongoing negotiations with creditors and the World Bank signal potential financial stability for Ghana, with Frimpong highlighting the positive impact of budgetary and stability fund support. He anticipates relative stability in the forex market and reduced inflationary pressures if these agreements materialize. However, he cautioned that failure to secure these funds could pose challenges for Ghana's economic stability. Frimpong also raised concerns about the government's ability to meet its financial projections and urged a focus on attracting foreign direct investment through carbon credit funding and industrial ecosystem development. He commended Ghana's efforts in positioning itself as an attractive investment destination post-COP28 and emphasized the importance of promoting industrialization and green energy initiatives to attract FDI. Overall, Frimpong remains cautiously optimistic about Ghana's economic prospects for 2024, urging concerted efforts to address key challenges and maintain financial stability.