Inflation target is ambitious

Dr S. Nii Ashong, a research fellow of the Centre for Policy Analysis (CEPA), has described the government’s projection of achieving a single digit inflationary figure this years as ambitious.

Contributing to a seminar organised by Databank Financial Services on this year’s budget in Accra on Tuesday, he said achieving the target was a Herculean task. He said that the introduction of new fees, levies, the upcoming increases in utility services and the government’s desire of tightening monetary growth were all cost escalators which will adversely affect the overall inflationary figure.

Dr Ashong was quick to point out that some of the targets in the budget were achievable. He advised the government to take a second look at using receipts from divesting programmes. Dr Ashong was of the view that proceeds from the programme should be used to reduce the domestic debt instead of using it as a budgetary support.

He lauded the government’s efforts at mobilising domestic revenue but was at a loss as to what constituted tax revenues and could be used for developmental purposes.

Professor Batholomew Armah, a fellow of the Institute of Economic Affairs (IEA), expressed concern about the spread between savings and lending rate in the country. He said that although inflationary rates were coming down, real interest rates have not come down thus making the cost of borrowing high.

Prof Armah who spoke on “Policy Initiatives needed to Accelerate Economic Development”, called for the introduction of policies that would ensure that the banks were competitive. He identified the proper development of the agricultural sector as key for the overall growth of the economy.

Prof Armah stressed the need for the government to allocate resources to certain critical sectors of the economy that would boost growth, especially the agriculture sector. For him, the performance of all variables, except the fisheries sector under the overall agricultural basket were modest.