Borrowing to service debt cause of high inflation - Economist

Dr Adu Sarkodie1212131313343432432423 Dr. Adu Sarkodie is an economist

Thu, 9 Jun 2022 Source: www.ghanaweb.com

Ghana records highest inflation in more than 18 years

April inflation reached 23.6%

BoG hikes policy rate to 19% to deal with inflation

An economist, Dr. Adu Sarkodie has blamed Ghana's debt servicing regime for the current rise in inflation.

According to him, borrowing to service the country's rising debt stock is pushing inflation up.

“The amount of monies we have borrowed to service our debt is why we have a high inflation rate,” he said in an interview with Accra-based 3FM.

He noted that “We use foreign currency to service our debt. We have created the mess so therefore we need to deal with it.”

He however wants government to "slow down on the borrowing or else things may get worst if we continue.”

Ghana’s inflation rate for May this year reached 27.6 percent from an earlier 23.6 percent recorded in April, the Ghana Statistical Service has said.

The hike was attributed to prices of food and transportation costs making it the highest rate recorded in more the 18 years since 2004.

Government Statistician, Professor Samuel Kobina Annim, addressing journalists on Wednesday, June 8 said food prices reached 30.1 percent from a year earlier, compared with a 26.6 percent increase in April.

For Non-food inflation, the rate increased to 25.7 percent, from 21.3 percent in the previous month, with transportation costs increasing by 39 percent.

The Bank of Ghana on May 23 hiked the monetary policy rate by 200 basis points from 17 percent to 19 percent – a move meant to stem rising inflation and address excess liquidity in circulation.

Meanwhile, government is yet to make headway with its move to raise some US$2 billion which will be injected into the economy, and provide relief to the budget and balance of payments.

Source: www.ghanaweb.com
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