Inflation drops to 23.1% as fiscal and monetary policies take effect

A woman selling tomatoes in a market in Dedza, Malawi, along the border with Mozambique.

Ghana’s economy is showing promising signs of recovery, as evidenced by a significant decline in inflation, which has dropped to 23.1% in May 2024 from 25.0% in April 2024.

This decline marks a notable decrease from the peak of 54.1% recorded in December 2022.

Minister for Finance Mohammed Amin Adam highlighted this achievement at a joint press conference held on Monday, July 1, 2024 the Ministry of Finance, the Bank of Ghana (BoG), and the International Monetary Fund (IMF).

Minister Adam attributed this positive trend to a series of effective fiscal and monetary policies implemented over the past year.

“The disinflation process we are witnessing is a direct result of our ongoing fiscal consolidation efforts, the appropriate tightening of monetary policy by the BoG, and the relative stability in the exchange rate,” he stated.

The Minister emphasized the government’s commitment to maintaining macroeconomic stability, which has been crucial in achieving these results. “Despite the challenging global environment, the strong leadership provided by His Excellency, President Nana Addo Dankwa Akufo-Addo, and the support and input of the people of Ghana have undoubtedly contributed to the successes we are seeing today,” Adam remarked.

Further details revealed that the government’s multi-faceted approach includes several key measures aimed at stabilizing the economy. These measures encompass a tight monetary policy by the BoG, deepening the fiscal consolidation program, intensifying the gold-for-oil and gold-for-reserves programs, and securing anticipated Forex inflows from multilateral, bilateral, and private sector financial institutions.

“We are expecting significant financial inflows, including the IMF’s 3rd Tranche of US$360 million to be disbursed to Ghana by close of business today, following the IMF Executive Board’s approval of the 2nd Review last Friday,” the Minister announced. Additional inflows are anticipated from the World Bank and other bilateral institutions.

Minister Adam also noted the broader economic recovery, highlighting that the overall real GDP growth for the first quarter of 2024 reached 4.7%, the highest since the first quarter of 2022. This growth is substantially better than the 3.1% recorded in the same period in 2023, with industry, agriculture, and services sectors all showing robust performances.

He expressed confidence in the continued positive trajectory of Ghana’s economy noting that in the near term, the country will even see greater results as it ramps up the implementation IMF supported programme.

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