The Director of the Institute of Statistical, Social and Economic Research (ISSER), Professor Peter Quartey, has expressed skepticism about Ghana’s ability to meet its 11 per cent inflation target by 2025.
Speaking at the ISSER 2025 budget review in Accra, Prof. Quartey described the target as overly ambitious, citing economic realities that pose significant challenges to its attainment.
Ghana’s inflation rate currently stands at 23 per cent, a notable decline from the 55 per cent recorded in 2021. However, it remains significantly higher than the projected 11.9 per cent target for 2025.
Prof. Quartey emphasized that despite the government’s acknowledgment of inflationary pressures and proposed measures to stabilize prices, achieving the set target is highly improbable given existing economic conditions.
Disconnect Between Fiscal Policies and Economic Realities
Prof. Quartey highlighted a fundamental disconnect between the government’s fiscal policies and prevailing economic conditions. He pointed to fiscal indiscipline, external shocks, and structural inefficiencies as major impediments to achieving a single-digit inflation rate.
“The budget acknowledges the problem of inflation and proposes measures to stabilize it, but the question is whether the target is achievable? An inflation rate of 11.9 per cent by 2025 is an uphill task. We need both fiscal and monetary authorities to coordinate effectively to bring inflation down, but the current trajectory suggests otherwise.”
The concern over Ghana’s inflation rate is compounded by the international economy. Prof. Quartey noted that compared to other African countries, Ghana’s inflation remains exceptionally high. He recounted a recent engagement with international partners, where Ghana’s 23 per cent inflation rate was met with surprise and disbelief, underscoring the severity of the challenge.
Agricultural Policies and Inflation Control
One of the key measures outlined in the budget to control inflation is agricultural transformation. The government has proposed policies aimed at stabilizing the prices of key commodities in the Consumer Price Index (CPI) basket.
However, Prof. Quartey questioned the effectiveness of these measures in tackling the root causes of inflation. “We need a more comprehensive approach that includes prudent fiscal management and confidence-building measures to ensure that inflation expectations are well anchored,” he advised.
Agriculture plays a crucial role in determining price stability, particularly in Ghana, where food inflation is a major component of overall inflation. While initiatives to boost agricultural productivity and ensure food security are commendable, they must be complemented by sound fiscal policies and effective monetary interventions.
Prof. Quartey emphasized the need for a well-coordinated effort between fiscal and monetary authorities to effectively manage inflation. He cautioned that without a disciplined approach to public spending and improved revenue mobilization, inflation will continue to pose a significant economic challenge.
Ghana has faced persistent fiscal deficits, leading to excessive borrowing and increased debt servicing costs. These factors contribute to inflationary pressures by fueling exchange rate volatility and increasing the cost of goods and services. The central bank’s monetary policies alone cannot bring inflation under control if fiscal policies remain expansionary.
To address these issues, Prof. Quartey called for tighter fiscal discipline, enhanced domestic revenue generation, and improved expenditure efficiency. He stressed that government policies should focus on restoring investor confidence and stabilizing the macroeconomic environment to achieve sustained economic growth.
While the government’s inflation target of 11.9 per cent by 2025 reflects its ambition to stabilize the economy, economic experts like Prof. Quartey warn that achieving this goal requires a more pragmatic approach. Ghana’s inflation rate remains high compared to its African counterparts, and without decisive policy interventions, the country risks missing its target.
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