An Economist and Senior Lecturer at the University of Ghana Business School (UGBS), Professor Lord Mensah, has cautioned that the current downward trend in inflation within the country is not likely to be a lasting phenomenon.
During an exclusive interview with GhanaWeb TV, Prof. Mensah elucidated that Ghana’s economic management policies are structured in a way that makes it challenging to maintain a consistently declining inflation trajectory.
He emphasized that numerous factors contribute to inflation, and these influencers often have interconnected effects on various sectors, creating the potential for inflation to surge.
“I would not say that the downward trend of inflation is going to be permanent; I would not say that. The kind of economic management we have is not going to make it permanent. What drives inflation in this country are so many things. We can talk about foreign exchange. We import a lot of things in this country. Look at fuel; an increase in the price of fuel can cause a spike in the price of agricultural produce and many others,” he explained.
Additionally, Prof. Mensah pointed out that the resumption of external debt payments is crucial to gaining an accurate understanding of Ghana’s inflation situation. He highlighted, “As a country, we have stopped paying our external debts, which shows that we are keeping more foreign exchange to meet the demands of foreign exchange. That keeps the inflation downwards, and you think you are doing well; then truly, you are not doing well. It is like building a mansion when you owe; your debtors would one day put their hands on your mansion. So until we start paying external debts, we cannot tell the true nature of our inflation.”