Address food shortage to check inflation – Economist
A senior economist at the Institute of Economic Affairs (IEA), Dr J.K. Kwakye, has stated that for Ghana to achieve sustained low inflation figures, there is the need to maintain regular food supply and the control of currency circulation.
He said over the years, management of inflation had not been effective as a result of the periodic food shortages coupled with high currency circulation in the system and stressed the need to address those weaknesses.
Dr Kwakye was sharing his perspectives on the economy at a round table discussion organised by the IEA on the topic “Assessment of Inflation Trends, Management and Macro-Economic Effects in Ghana: Examining the Costs and Benefits of Achieving Low Inflation” in Accra.
He indicated that the fiscal austerity measures put in place by the government had helped in recording a sharp drop in inflation in recent times which brought in its trail the slowing down of economic activities in 2009.
He was of the belief that low and stable inflation could be considered beneficial for growth and employment in the long-run notwithstanding the short term costs that came with such drops and recalled that Ghana’s own experience of a more stable inflation during 1991-2009 assured better growth performance compared with the 1979 -1990 period when inflation was higher and less stable.
The discussion which was chaired by the Member of Parliament (MP) for Sege, Mr Alfred Abayateye, brought together some dignitaries including economists, MPs, officials from the Central Bank, a Member of the Council of State, Prof. Akilakpa Sawyer and a former Chairman of the Convention People’s Party (CPP), Dr Edmund Delle.
Dr Kwakye, whose paper examined varied issues ranging from the possible reasons behind the recent inflation decrease, its macroeconomic costs to the likely causes of future inflation, said 2010 had witnessed an upward trend in government expenditure which would further be boosted by the onset of oil in 2011.
Elaborating, Dr Kwakye said given the spending pressures expected from the oil revenue, achieving a single-digit inflation as envisaged would entail tight monetary policy in the form of high interest and exchange rates, which he stressed could slow economic activities.
The Director of Research at the Bank of Ghana, Dr Ernest Addison, in his contributory comments said the current debate on the current inflation figures ought to be focused on the micro framework that promoted stability for a better growth and that the injection of foreign exchange into the economy had largely contributed to the down-ward trend of inflation in the country.
Source: Daily Graphic