The Institute of Economic Affairs has proposed some interventions that the government and the Bank of Ghana can adopt to deal with the rising inflation.
A statement by the Institute on September 19, 2022, noted that individual factors driving inflation should be targeted.
“The current inflation is largely driven by supply and cost factors, particularly food, fuel, transport, and the exchange rate. The effects of these factors can be illustrated by breaking down the August headline inflation of 33.9%: Diesel inflation was 116.9%; petrol inflation, 80.5%; transport inflation (embedding fuel costs), 45.7%; imported inflation (reflecting the effect of the exchange rate), 35.2%; and food inflation, 34.4%,” parts of IEA’s statement read.
The IEA stated that among measures that can be adopted to reduce inflation, these four should be looked at by the government.
- Regarding food, we call for reinforcement of measures to ensure that food stocks are easily transported from farm gates to markets. We call for subsidies on basic staples like maize, rice, cooking oil, and bread.
Regarding fuel, we call for a reduction of some of the fuel taxes/levies and the use of part of the Government’s windfall gains from higher oil prices to cushion pump prices.
Regarding transport, we call for the expansion of public transport and subsidization of fares to cushion the masses.
Regarding the exchange rate, we call on the Bank of Ghana to enforce foreign exchange laws, including relating to forex carry-on limits for travellers, forex trading, pricing of goods and services in forex, and forex transfers through banks. We also call on the Bank to negotiate with foreign companies to stagger the repatriation of their dividends and profits to reduce pressure on the exchange rate