Professor Peter Quartey, Director of the Institute of Statistical, Social and Economic Research (ISSER), has expressed serious concerns about Ghana’s ability to achieve its ambitious inflation target of 11.9% by 2025. He believes this target is unrealistic given the country’s prevailing economic challenges and the disconnect between government fiscal policies and the realities on the ground. Prof. Quartey’s assessment, delivered during the ISSER 2025 budget review in Accra, highlighted the stark contrast between the desired inflation rate and the current reality of 23%, a figure significantly higher than the targeted rate, although considerably lower than the 55% recorded in 2021. He emphasized the need for a more pragmatic approach, suggesting that the government’s current policies are insufficient to address the underlying causes of this persistent inflation.
Prof. Quartey attributed Ghana’s stubbornly high inflation to a combination of factors, primarily fiscal indiscipline, external shocks, and deep-seated structural inefficiencies within the economy. While acknowledging the government’s recognition of the inflation problem and its proposed stabilization measures, he questioned the feasibility of achieving the 11.9% target within the stipulated timeframe. He stressed the crucial need for effective coordination between fiscal and monetary authorities to rein in inflation, but expressed skepticism about the current trajectory of policy implementation. He warned that without a significant shift in approach, the target is likely to remain elusive.
The Professor specifically pointed to the government’s agricultural transformation policies, aimed at stabilizing the prices of essential commodities within the Consumer Price Index (CPI) basket. While laudable in principle, he argued that these measures alone are unlikely to effectively tackle the root causes of inflation. He advocated for a more comprehensive and holistic strategy that encompasses prudent fiscal management and confidence-building measures to anchor inflation expectations. This would involve not just addressing the supply-side issues through agricultural interventions, but also managing demand-side pressures through responsible fiscal policies.
Furthermore, Prof. Quartey underscored the severity of Ghana’s inflation compared to its African counterparts. He recounted a recent interaction with international partners where the mention of Ghana’s 23% inflation rate was met with astonishment and disbelief, highlighting the country’s outlier status in the region. This underscores the urgency of addressing the inflationary pressures, not just for domestic economic stability but also for maintaining international credibility and attracting foreign investment. The high inflation rate paints a picture of economic instability, which could deter potential investors and further exacerbate the country’s economic woes.
The core of Prof. Quartey’s argument revolves around the disconnect between the government’s stated intentions and the practical realities of its economic policies. He suggests that while the government acknowledges the inflation problem and proposes solutions, the actual implementation and effectiveness of these policies are questionable. The ambitious target of 11.9% inflation by 2025 appears detached from the current economic trajectory and requires a more grounded and realistic approach. The emphasis should be shifted from setting aspirational targets to implementing concrete and effective measures that address the fundamental issues driving inflation.
In conclusion, Prof. Quartey’s analysis paints a concerning picture of Ghana’s inflationary predicament. He calls for a more realistic assessment of the situation, advocating for a comprehensive strategy that tackles the root causes of inflation rather than focusing on superficial solutions. The need for coordinated fiscal and monetary policies, coupled with confidence-building measures, is crucial for achieving sustainable price stability and putting the Ghanaian economy on a path to recovery. The comparison with other African countries further emphasizes the urgency of the situation and the need for swift and decisive action to avoid further economic deterioration.
