The World Bank has advised the Government to give a boost to the country’s production capacity to deal with the continued rising inflation rate.
This is because a good production capacity would help speed up the country’s recovery process from the impact of the COVID-19 pandemic, contribute to economic stability and protect the livelihood of the poor.
Mr Pierre Frank Laporte, the World Bank Country Director, Africa, noted that the pandemic, together with the slowdown in advanced economies, which affected the demand for oil globally, had a major supply shock that drove down growth recorded in 2020.
The situation, he said, required that: “Ghana boosts its health systems and social safety nets by boosting the production capacity of the economy, which is the most sustainable way of dealing with inflation.”
He was speaking at the opening of the University of Ghana (UG) Annual New Year School and Conference in Accra on Tuesday.
Mr Laporte noted that prior to the COVID pandemic, Ghana was growing at a fast pace, however, economic activities almost came to a halt, due mostly to restrictions to trade and normal economic activities because of lockdowns and other containment measures.
Again, the country missed its inflation target of eight percent, and recorded a 12.6 percent inflation at the end of the 2021 fiscal year, something, Mr Laporte said, was not good for the economy’s recovery.
“As you know, inflation in Ghana has exceeded the Central Bank’s target since October last year , largely driven by global inflation, and there are many reasons to be concerned,” he said.
The Country Director observed that inflation was a terrible thing for the economy, especially, for the poor, and that dealing with inflation through monetary policy required “tightening”, which was also costly because it increased the price of credit for firms and the Government.
He also noted that: “the public debt rising from 60 percent of gross domestic product (GDP) in 2019 to the high 70s in the late 2021 as a result of higher cost of debt servicing, was unavoidable.”
Nonetheless, Mr Laporte, said, there was the need to “lay out a road map for returning to a state of equilibrium that would be credible, which means that we require efforts not only from creditors, but also from tax-payers, and beneficiaries of government spending.”
He promised that the World Bank would continue to support the country in its pathway to recovery and resilience through analytical work on debt, revenue mobilisation, and construction of financing.
President Nana Addo Dankwa Akufo-Addo, who opened the programme, noted that the Government had taken steps to consolidate gains made and enhance the living standards of Ghanaians.
“The proactive decisions taken by Government to fight the pandemic as well as revitalising and transforming the economy with GH?100 billion Ghana CARES programme to create jobs and prosperity for Ghanaians have begun yielding results,” he said.
He added that processes to integrate all systems to establish a common source of information, would help in mining insightful data to drive improvements in domestic revenue mobilisation and help implement targeted social programmes to enhance the living standards of the citizens.
Since its inception in 1948, the Annual New Year School and Conference has been the flagship programme of the University of Ghana, Legon, and attracts people of all walks of life to deliberate on topical issues of national and international interest.
It opens at the beginning of the year and at the end of every School and Conference, a communique is issued, which captures the recommendations of participants and discussants and inform policy decisions and directions in the country.
This year’s Conference is on the theme, “COVID-19 and socioeconomic dynamics in Ghana.”