Inflation to return to pre-crisis level — Dr Addison
The Governor of the Bank of Ghana (BoG), Dr Ernest Addison, has given an assurance that inflation will soon return to the pre-crisis levels as the central bank continues to implement policies and measures to bring inflation within the target band of 6-10 per cent.
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After reaching a 22-year high of 54.1 per cent in December 2022, inflation has seen a decline this year, dropping to 26.4 per cent in November 2023.
Speaking at the End of Year Cocktail of the BoG, Dr Addison said the policy mix under the IMF-supported PC-PEG programme was gradually yielding positive results.
“I kept on reminding people that inflation was at 12.7 per cent 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 in 2022. 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 stated.
Meanwhile, despite his assertion, the prices of goods and services, which have doubled or tripled in many instances over the last 18 months, remain the same albeit not rising further, a development which has eroded the disposable income of salaried workers.
External sector
The Governor said the country’s external sector position had also improved in the year, alongside some build-up in foreign exchange reserve buffers which had provided some stability in the foreign exchange market.
Dr Addison added that the high-frequency economic indicators monitored by the central bank had continued to improve, signalling the likelihood of outperforming the GDP growth projection for the year.
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He said the financial sector had also remained relatively stable and sound amid the series of shocks in the past six years.
“Prudential data in the year to October 2023 show the 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,” he stated.
Investment in technology
The governor also noted that the BoG has invested heavily in technology to correct some of the weaknesses it inherited with data integrity by banks that misreported, leading to failures in banks and other financial institutions.
“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,” he said.
He said Central Banks from South Africa, Egypt, Barbados, Zambia and the Solomon Islands have all come to learn from the BoG.