Minister for Finance, Dr. Cassiel Ato Forson, has projected a decline in Ghana’s inflation rate to 8% ± 2% within the year, down from the current 23.1%, indicating a 13% to 15% reduction in headline inflation.
He made this assertion during an X Space discussion on Sunday, March 9, emphasizing the government’s commitment to stabilizing the economy and addressing the ongoing cost-of-living crisis.
“There is a significant cost-of-living crisis, and it is getting worse. We need to take steps to reverse this trend,” Dr. Forson stated. “Some of the measures include stabilizing and consolidating the economy through fiscal discipline to ensure economic stability. Our goal is to bring inflation down to 8% ± 2% by the end of the year.”
Inflation rate for February 2025 has declined slightly to 23.1% from the 23.5% recorded in January, driven mainly by a reduction in food inflation.
Government Statistician, Prof. Samuel Kobina Annim, announcing the new inflation rate, attributed the decline to a consistent drop in food inflation over the past four months.
Despite the decline, he pointed out that the February annual inflation rate was still the third-highest recorded in the last 10 months.
Government to Reduce Borrowing, Support Private Sector Growth
Dr. Ato Forson, speaking further during the X Space discussion, highlighted concerns about high interest rates and the crowding out of the private sector due to excessive government borrowing.
“Access to credit has become worrisome, with interest rates being very high. The government has been borrowing heavily from banks, making it easier for them to lend to the government rather than the private sector,” he noted.
He, however, assured that the government has started reducing its activities in the treasury market, which is expected to free up more credit for private sector growth.
“In the last two months, we have rejected bids amounting to GHS 10 billion on some occasions and GHS 8 billion to GHS 5 billion at other times. Over time, banks will have no choice but to lend to the private sector,” he explained.
Declining Treasury Bill Rates
The Finance Minister also pointed to a downward trend in Treasury bill (T-bill) rates, attributing it to reduced government borrowing and outlining the following rate reductions:
91-day T-bill rate: Declined from 28% to 17.9%
364-day T-bill rate: Dropped from 30.4% to 19.9%
182-day T-bill rate: Reduced from 29% to 18%
“These reductions indicate a positive trend that, in the long run, will require the central bank to take monetary actions to reflect this progress,” Dr. Forson added.
He assured that the government would collaborate with the central bank to sustain the declining trend in interest rates, ultimately benefiting businesses and lowering the cost of doing business in Ghana.
Norvan Reports