Governor of the Bank of Ghana (BoG) Dr Ernest Addison has said that the central bank has been vindicated by the 26.4 percent inflation rate recorded in November 2023.
Dr Addison said that through effective collaboration with the Ministry of Finance, the Bank of Ghana has formulated monetary policies to keep the economy steady.
The inflation rate dropped to 26.4% in November 2023 from 35.2% recorded in October 2023, the Ghana Statistical Service (GSS) announced. According to the GSS, the major factor that contributed to the drop was food inflation.
Food inflation dropped by 12.6% to 32.2% in November, 2023. The month-on-month rate of food inflation was 0.8%. For non-food inflation, it also eased to 21.7%, as compared with 27.7% in October 2023. The month-on-month rate of non-food inflation stood at 2.2%. Five divisions recorded inflation rates higher than the national average.
They are Alcoholic Beverages, Tobacco and Narcotics (39.0%); Personal Care, Social Protection and Miscellaneous Goods and Services (35.4%); Food and Non-Alcoholic Beverages (32.2%); Furnishings, Household Equipment and Routine Household Maintenance (32.2%) and Restaurants and Accommodation Services (27.1%).
Speaking during an end-of-year cocktail event held on Thursday, December 14, Dr Addison said, “The policy mix under the IMF-supported PC-PEG programme is gradually yielding positive results. From the peak of 54.1 percent in December 2022, headline inflation has declined to 35.2 percent in October 2023 and today, it has fallen to 26.4%.
I kept on reminding people that inflation was at 12.7% in December 2021 and what we saw in 2022 should not be used to judge us. As you are aware there has been considerable noise from our detractors who have celebrated the high inflation recorded. Today, we are vindicated that inflation in 2022 was just a blip and we are quickly returning to where we were before the crisis.”
He further that the country’s external sector position has also improved in the year, alongside some buildup in foreign exchange reserve buffers which has provided some stability in the foreign exchange market. The high frequency economic indicators monitored by the Bank, he added, has continued to improve, signalling the likelihood of outperforming the GDP growth projection for the year.
“The financial sector has remained relatively stable and sound amid the series of shocks in the past six years. Prudential data in the year to October, 2023, show profitability of banks has remained relatively strong, and the Capital Adequacy Ratio, adjusted for the regulatory reliefs, was also higher than the revised prudential minimum. The evidence is clear that the economy is responding well to the policy initiatives that have been put in place.
“The Bank of Ghana has invested heavily in technology to correct some of the weaknesses we inherited with data integrity by Banks that misreported leading to failures in Banks and other SDIs in 2016. A new Suptech tool, the Online Regulatory Analytic Surveillance System (ORASS) has been developed and completed this year and our staff have worked with our technology partners to develop tools that support the entire supervisory cycle from licensing to resolution.
The ORASS is a major reform using technology to enhance our oversight of the financial system and we are the first African Central Bank to develop such a system. We have had Central Banks come from South Africa, Egypt, Barbados, Zambia and Solomon Islands to learn from us.
We have also been working to deepen the digitization drive in the economy, including the development of a Central Bank Digital Currency (CBDC). This evening, after the successful eCedi pilot, the Bank will announce the winners of the recently organised eCedi Hackathon to encourage and potentially leverage on the local CBDC innovation, exchange knowledge, and build partnerships.
Out of 88 applications from students, programmers, FinTechs, bankers, engineers, and FinTech enthusiasts, etc. 66 were selected for the hackathon. Of this, 10 finalists have been shortlisted. We will be announcing the winners immediately after this reception at the Kempinski Hotel and invite all of you to attend.
“We want to thank His Excellency the President, and the entire cabinet for the strong leadership exhibited which has helped to turn the fortunes of our economy. To conclude, 2023 has been challenging but fulfilling. We are confident about the economic outlook and expect to see significant improvement in the operating environment for businesses in 2024,” Dr Addison said.