Will Ghana achieve near-term targets?

Ghana's Minister of Finance-Designate, Cassiel Forson, is driving a bold strategy to target inflation at 8 per cent in a bid to stabilize the economy and attract investors. Speaking in a recent interview, the Minister emphasized the need for a coordinated effort between various government ministries and private institutions to tackle the root causes of inflation, particularly food inflation, which has been a key driver of the rising inflation rate in the country. With the goal of implementing an expenditure-based, front-loaded fiscal consolidation, Forson is aiming to send a strong signal to the bond market and drive down inflation in the shortest possible time. The Minister's approach involves reopening the domestic bond market and reducing the reliance on Treasury bills, while focusing on establishing an independent debt management office to keep the debt ceiling in check. By building credibility in fiscal policies and instilling confidence in the market, Ghana hopes to attract more long-term investments and reduce the burden on short-term instruments. In terms of investment climate, the recent restructuring of boards and appointments in state corporations is seen as a routine process following a change in government. Foreign investors are expected to react positively to the new administration and its promises, especially with the election risks largely diminished. To further enhance investment flow, the swift constitution of statutory boards and implementation of clear investment policies are crucial. Looking ahead, the Monetary Policy Committee is set to convene for its first meeting of the year, with expectations of maintaining the current policy stance to align with economic indicators. While there may be some discretion in the committee's decisions, the overall outlook suggests a steady course for monetary policy in the upcoming meetings. With Ghana's economy facing challenges amidst the ongoing pandemic, the government's proactive measures and strategic planning under the leadership of Finance Minister-Designate Cassiel Forson aim to steer the country towards economic stability, attract investments, and achieve targeted inflation rates in the near term.