The government’s 30 percent inflation target by the end of the year is positive but still high, an economist Dr Theo Aheampong has said.
Dr Acheampong indicated that 30 percent is still enough to eat into the savings and livelihoods of Ghanains.
Finance Minister Ken Ofori-Atta told Parliament during the mid-year budget presentation on Monday, July 31 that “the 2023 Budget was presented using endSeptember 2022 data. As at end-December 2022, our available data indicate that Overall Real Gross Domestic Product (GDP) growth was 3.1 percent, compared to the revised target of 3.7 percent; Non-oil Real GDP growth was 3.8 percent, compared to the revised target of 4.3 percent; the End-December inflation rate was 54.1 percent compared to the projected 28.5 percent;
“Total Revenue and Grants for the period amounted to GH¢96.65 billion (15.8% of GDP) compared with the revised target of GH¢96.84 billion (16.4 percent of GDP); Total Expenditure on commitment basis amounted to GH¢165.06 billion (27.0% of GDP) against the revised target of GH¢133.84 billion (22.6% of GDP); Overall Budget deficit, on commitment basis, was 11.8 percent of GDP against the revised target of a deficit of 4.3 percent of GDP;
On cash basis, he said the overall budget deficit was 10.7 percent of GDP with a corresponding Primary deficit of 3.2 percent of GDP compared to a revised Mid-Year Budget target of a surplus of 0.4 percent of GDP.
The corresponding Primary Balance on cash basis was a deficit of 3.2 percent of GDP against a revised target of a surplus of 0.4 percent of GDP; and Gross International Reserves were equivalent to 2.7 months of import cover.”
Speaking on this situation on the Ghana Tonight show on TV3 Monday, July 31, Dr Thero Acheampong said “The two key things that many citizens are interested in are the exchange rate, how the Cedi performs to the Dollar, and Inflation. Those are the two biggest beaches that they have got to deal with and how that affects the cost of living they are faced with it.
“If you look at the inflation numbers since the beginning of this year, it is coming down. In the mid-year budget, the government says they are going to be doing just around the 30 percent inflation mark by the end of the year, from where we are now which is 42 percent.
“This will be within the IMF programme target that they have got to meet by the end of the year so is positive but of course, 30 percent is still extremely high and it still eats into their savings and their livelihoods.”
He added “On the exchange rate front, we have seen some relative stability in the Cedi over the last couple of weeks. My expectation is that this will likely will be sustained going forward especially when you look at the budget there is not only a drop in revenue but there is also a much bigger adjustment of cuts on the expenditure side of things.
“So those two things I think will be really important going toward the end of the year.”