Ghana’s rising inflation is due to external factors well as depreciation of the Cedi – Laporte

The World Bank Country Director for Ghana, Liberia, and Sierra Leone, Pierre Laporte has said the rising rate of inflation in Ghana is party due to the external factors as well as the depreciation of the Cedi.

The August inflation has reached 33.9 percent. This is a 2.2 percent increase in the July figure of 31.7 percent.

Mr Laporte called for urgent steps to be taken by the managers of the economy to address the depreciation of the local currency.

Speaking in interview with TV3’s Paa Kwesi Asare on the Business Focus, Mr Laporte also said Ghana must quicken its move to get a programme under the International Monetary Fund (IMF) to deal with the economic challenges.

“There is an urgency, Ghana needs to tackle these problems with urgency. What is happening in the few months is that inflation has gone up partly because of what is happening  upside  but also party because the  currency has depreciated.

“From where I sit, if nothing happens it will be very difficult for Ghana to find another way out domestic debt structuring is very difficult. Why? Because typically banks will invest in government papers, bonds and when you ask banks to care of stuffs like that it affects the capital adequacy  and it pits at risk these banks where by  international debt are easier to reschedule  or restructure.”

Ghana is seeking a programme under the Fund.

The Managing Director of the IMF Kristalina Georgieva stated that a deal between Ghana and the IMF should be reached and finalized before the end of the year.

READ ALSO:  Gov't suspends 20 percent of expenditure in approved 2022 Budget

In a closed-door meeting with President Nana Addo Dankwa Akufo-Addo on Monday, September 5, on the sidelines of the Africa Adaptation Summit, in Rotterdam, Netherlands, she told him “we understand the urgency, and we will move as quickly as possible”.

Describing Ghana as a “superb country”, she reiterated the determination of the Fund to work with Government and the Ministry of Finance, and ensure that an agreement is in place before the end of the year.

On his part, President Akufo-Addo indicated to the IMF boss that a lot of work has been done by Cabinet and the Ministry of Finance, and the document to be presented by the Ghana side “is ready for the scrutiny of the IMF”.

Meanwhile, Kristalina Georgieva has emphasized that Ghana’s current economic challenges are not locally generated but from external shocks.

Speaking on the sidelines of the Fund’s engagements with the Ghanaian delegation, Kristalina Georgieva stated that contrary to the narrative that Ghana is not in these challenges because of any bad policies of the Akufo-Addo administration, the IMF boss stated that the factors are exogenous.

“We have started very constructive discussions already and to the people of Ghana, like everybody on this planet, you have been hurt by exogenous shocks,” she said.

She mentioned the extraneous factors which have contributed to Ghana’s economic woes, leading to the West African country seeking a programme from the IMF.

“First the pandemic, then Russia’s war in Ukraine. We need to realize thar it is not because of bad policies in the country but because of this combination of shocks, and, therefore, we have to support Ghana,” she said.

READ ALSO:  Economic growth momentum softened despite strong rebound from the pandemic - BoG

She also indicated that Ghana is a member of the IMF, “a strong country with fantastic people”, and as such it is incumbent on the Fund to lend the country support.

Kristalina Georgieva also indicated “we have to support Ghana because your strength contributes to the strength of your neighbours; it contributes to a stronger world”.

Ghana is before the IMF for $3 billion to help the country navigate through the hostile economic crisis it finds itself in as a result of the adverse effects of the deadly coronavirus pandemic and the ongoing conflict between Russia and Ukraine.

By Laud Nartey||Ghana