Ghana’s economy requires urgent restructuring – H. Kwasi Prempeh

The Executive Director of the Ghana Centre for Democratic Development (CDD-Ghana) Professor H. Kwasi Prempeh has said Ghana’s economy needs restructuring and transformation immediately.

In his view, the local economy is not an economy that needs to be manage.

“Like our State, ours is not an economy to be managed; it is an economy to be restructured and transformed. Long overdue!” Prof Prempeh said in a Facebook post.

Regarding this matter, a senior lecturer at the University of Ghana Business School, Dr Patrick Asuming also said the impact of external factors on the local economy has been exacerbated by how the economy has been structured.

In his view, Ghana is importing a lot of items that can be produced locally.

Contributing to a discussion on the rising rate of inflation in Ghana while speaking on the Key Points on TV3 Saturday August 13, Dr Assuming said “When you look at the CPI basket, the local food items have more weight than the imported items. So even if we discounted that even for local items, we are seeing inflation of 31.9 per cent.

“So it is not trivial at all. Obviously, you cannot discount the the fact that external factors may have played the role. Earlier on in the year, a big chunk of the inflation we are seeing were coming from the fact that crude oil prices on the international market were going up significantly. What that meant was that fuel prices will go up, transport prices go up, but it doesn’t end there.

“All the things that we produce using fuel, it means the cost will go up. So we can’t say there hasn’t been the external factor. But I think the external impacts on our economy is exacerbated by the fact of how our economy is structured. That is that, we have built an economy that is so dependent on foreigners ie. we import things that we should be producing ourselves.”

Inflation rate for the month of July 2022 was 31.7 per cent, the Ghana Statistical Service (GSS) announced on Wednesday August 10.

This is up from the 29.8 per cent recorded in June.

On year-on-year basis, the difference between Food inflation (32.3%) and Non-food (31.3%) was 1 percentage points.

On month-on-month basis, food inflation (3.3%)  records a higher rate than non-food (3.0%), leading to 0.3 percentage point difference.

The Monetary Policy Committee (MPC) of the Bank of Ghana (BoG) is holding an emergency meeting today, Wednesday, 17th August 2022.

The meeting, according to the BoG, is to review recent developments in the economy.

“The meeting will conclude with an announcement of the decisions of the Committee,” a statement said on Monday, August 15.

The regulator in an earlier statement called for calm as it has introduced measures to resolve the fall of the Cedi.

The BoG has identified five key reasons for the woes of the local currency.

These are “The strength of the US dollar, Investor reaction to Credit Rating Downgrade, Non-Roll over of Maturing Bonds, The sharp rise in crude oil prices and impact on the Oil Bill, Loss of External Financing.”

The measures introduced to resolve these, according to the BoG, are the “Gold Purchase Program to increase foreign exchange reserves; Special Foreign Exchange Auction for the Bulk Distribution Company’s (BDCs) to help with the importation of petroleum products; Bank of Ghana is entering into a cooperation agreement with the mining companies to provide BOG with the opportunity to buy gold as when it becomes available.

“The Bank of Ghana is supporting the banking sector with foreign currency liquidity to help meet the demand for external payments. The recently approved USD750,000,000 Afriexim loan facility by Parliament, once disbursed, will boost the foreign exchange position of the country and help restore confidence.

“The Cocoa Loan is expected in the last quarter of the year. This facility will also help provide more foreign currency to help address the cedi depreciation. In the short term, we expect that when the IMF programme is finalized, it will also go a long way to help restore confidence in the economy and drive portfolio flows.”

These measures will go a long way to increase the foreign exchange reserve position of the Central Bank, a statement issued by the BoG said.

Source: 3news