Governor of the Bank of Ghana, Dr. Ernest Addison, stated that the Central Bank is on track to significantly reduce inflation and that his organization expects it to ease even further.
He claims that this is supported by maintaining the application of sensible policies until inflation expectations are firmly fixed on the single-digit target.
“In this regard, the Bank of Ghana will continue to monitor both domestic and external developments and respond appropriately to ensure that the downward inflation trajectory observed in recent months is sustained without undermining growth. The 2023 experience of a strong reduction in inflation and stronger growth is instructive”, the Governor disclosed at a meeting involving the Country Representative of the International Monetary Fund and the Minister of Finance, Ken Ofori-Atta.
“During our last interaction, I had stressed on steadfast commitment from all sides and the Bank of Ghana (BoG) will work on delivering its mandate on price and financial stability. The recent trends in inflation that the economy has witnessed in the course of 2023 suggest that we are on course”, he added.
One year ago, in January 2023, inflation stood at approximately 54%. However, due to robust and innovative policies, stringent monetary conditions, and a relatively stable exchange rate, the Governor highlighted that inflation has been reduced by more than half by the close of 2023, currently standing at 23.0%.
The Governor further emphasized that several factors have contributed to this disinflationary trend. These factors include the consistent monetary policy stance maintained throughout 2023, the stability of crude oil prices resulting in steady fuel prices and a positive impact on transportation costs, a comparatively stable exchange rate environment, increased foreign exchange reserves through the gold for reserve program, and favorable climatic conditions positively affecting the food supply chain process.
IMF programme and beyond
He added that with a successful conclusion of the first review of the IMF Programme, “we need to begin to think of the second review of the programme and beyond”.
While tentative indications point to sound implementation of policies through to December 2023, he stressed that vigilance and commitment will be needed in 2024 to undertake all the structural reforms envisaged under the programme.
“Implementation of these reforms to ensure the economy functions well will be critical”, he concluded.