Dr. Cassiel Ato Forson, Ghana’s finance minister, is optimistic that the country’s inflation rate would stay below 5% by the end of 2026 in spite of escalating geopolitical tensions in the Middle East and their possible effects on commodities and energy prices worldwide.
His forecast follows a stop in Ghana’s disinflation run in April, when headline inflation increased to 3.4% from 3.2% in March, marking the first rise following 15 months of falling price pressures.
The Bank of Ghana’s medium-term target range of 8%, plus or minus 2 percentage points, is still safely within the predicted inflation rate.
In an interview with Bloomberg, Dr. Forson admitted that Ghana’s inflation outlook is at danger due to the Middle East crisis, specifically due to increased fuel and fertiliser prices and interruptions to international supply chains.
“The conflict poses conflict on the price of petroleum product and then impact on the most importantly, fertiliser and supply chain. Availability isn’t a concern to us at the moment. I think the challenge has to do with price increases,” he said.
The Finance Minister stated that despite these dangers, Ghana is still in a strong position to withstand external shocks because of its substantial foreign exchange reserves, growing gold exports, and favourable commodities prices.
“The good news is that in Ghana, we do not have subsidies on petroleum product. But the good news is that we had built some significant reserves,” he stated.
“And our gold production is also going up and gold prices is also very high. And so Ghana is in a comfortable position to be able to withstand those shocks,” Dr. Forson added.
He says that the nation’s expanding gold receipts and reserve buffers offer enough assistance to cover the foreign exchange requirement for essential imports.
But he acknowledged that there might be some pressure on inflation in the coming months.
“Where I think we may see a bit of pressure will be on the back of inflation. We expect that inflation may inch up today, it’s about 3.4. I still think we’ll be better off. And I don’t think the country’s inflation will exceed 5% by the end of the year.”
The Finance Minister added that one of the main factors bolstering the inflation prognosis was the improvement in Ghana’s export industry.
“Because our major exports are doing well. Cocoa, yes, dipped, but the cocoa price has started going up. Oil, we’re also an oil exporter. And so foreign exchange, we’re also getting something back.”
His remarks coincide with the Bank of Ghana’s shift to a more cautious approach to monetary policy. Citing the inflationary threats created by the Middle East conflict and rising global crude oil prices, the central bank maintained its policy rate at 14% last month following a series of rate decreases earlier in the year.
Policymakers cautioned that recent improvements in price stability could be jeopardised by increased energy costs and supply chain interruptions.
Source: newsthemegh.com