Some economic watchers have expressed scepticism about the International Monetary Fund’s (IMF) projection that Ghana’s inflation will retreat to single digits by the end of 2025.
In its Economic Outlook Report, the IMF forecasts an end-of-year inflation rate of 8 per cent for Ghana, aligning with the government’s goals outlined in the 2024 budget.
The Finance Minister’s statement in the budget indicates an expected decline in inflation from 29.4 per cent in 2023 to 15 per cent in 2024, further reducing to 8 per cent from 2025 onwards.
The IMF’s projection aligns with the Bank of Ghana’s aim for a 15 per cent year-end inflation rate in 2024.
These forecasts rely on the government’s implementation of measures under the IMF programme and the Bank of Ghana’s commitment to tight monetary policies.
However, some economic watchers argue that this projection is impracticable. Professor Lord Mensah, an associate professor at the University of Ghana Business School, acknowledges the optimism in the IMF’s forecast but highlights the challenges that may arise in implementing the necessary economic policies and structural reforms in Ghana’s economic landscape.
“We are about to resume our debt payment, external debt payment after negotiations. I mean that is when we get to know the pro level of the exchange debt, even though our debt service will come down, the government will definitely be on the same market looking for dollars to go and pay for this our debt and we know very well that the exchange rate depreciates, it tends to have a true effect on inflation because we live in a country where the dominant or the essentials of our living which has to do with fuel usage and all those which we don’t manufacture here in Ghana.”
Professor James Atta Peprah, an Associate Professor of Economics at the University of Cape Coast, also disagrees with the projection, citing factors such as the cost of doing business in Ghana and the potential impact of power outages (dumsor) on rising prices.
He questions how price levels can come down if the country faces power outages till the end of the year.
“I disagree with that projection that inflation will come down, there are so many factors. Look at the cost of doing business in Ghana. Look at dumsor, dumsor we’ve found ourselves in. All these factors compound, and contribute to rising prices so if we should find ourselves in this dumsor situation till December, how can price levels come down.”
