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

Ghana’s economy is currently exhibiting signs of recovery, with a noteworthy decline in inflation rate. The inflation rate dropped to 23.1% in May 2024 from 25.0% in April 2024, representing a marked decrease from the peak of 54.1% recorded in December 2022. This positive trend has been primarily attributed to the effective implementation of various fiscal and monetary policies over the past year by the Ministry of Finance, the Bank of Ghana (BoG), and the International Monetary Fund (IMF).

Speaking at a joint press conference, the Minister for Finance, Dr. Mohammed Amin Adam, hailed this achievement. He attributed the declining inflation to the ongoing fiscal consolidation efforts, appropriate tightening of monetary policy by the BoG, and the relative stability in the exchange rate. He also underscored the government’s commitment to maintaining macroeconomic stability, praising the strong leadership of President Nana Addo Dankwa Akufo-Addo and the support of the Ghanaian people.

In order to stabilize the economy, the government has implemented a multi-faceted approach that includes 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 Foreign Exchange inflows from multilateral, bilateral, and private sector financial institutions. The Minister also announced that the IMF’s third tranche of US$360 million will be disbursed to Ghana by the end of July 2024, following the IMF Executive Board’s approval of the second review last week. Additional inflows are anticipated from the World Bank and other bilateral institutions.

Apart from the inflation decline, Ghana’s economy is also witnessing broader recovery, as indicated by the real GDP growth for the first quarter of 2024, which reached 4.7%, marking the highest since the first quarter of 2022. The industrial, agricultural, and services sectors all showcased robust performances.

Dr. Mohammed Amin Adam expressed optimism for the continued positive trajectory of Ghana’s economy, especially in the near future as it accelerates the implementation of the IMF-supported program.

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