The Institute of Statistical, Social and Economic Research (ISSER) at the University of Ghana has linked rising labor agitations, increased business costs, and the collapse of some businesses to high foreign exchange rates and inflation.
This conclusion comes from the Institute’s assessment of the recent mid-year budget review presented by Finance Minister Dr. Mohammed Amin Adam.
According to the report, the cedi depreciated by 18.6% against the US Dollar, 17.9% against the Pound Sterling, and 16.0% against the Euro in the first half of 2024.
This compares to a 27.8% depreciation against the US Dollar, 31.9% against the Pound Sterling, and 30.3% against the Euro in 2023. In 2022, the cedi depreciated by 30.0% against the US Dollar, 21.2% against the Pound Sterling, and 25.3% against the Euro, indicating some stabilization over the past three years.
The report noted that, aside from January, the cedi was generally more volatile against major foreign currencies in the first half of 2024 compared to the same period last year. Despite this increased volatility, cumulative depreciation rates were relatively lower.
The report recommended that the government take further steps to reduce the cedi’s depreciation against major trading currencies and increase exports to lessen the demand for foreign exchange.
The report also advised the central bank to enforce forex regulations more strictly and increase its presence in the exchange rate market.
Regarding inflation, ISSER highlighted a decrease to 22.8% in June 2024, a significant drop from the peak of 54.6% in December 2022.
However, compared to the 12.6% inflation rate in December 2021, the current figure remains high.
ISSER urged the government to examine the commodities driving inflation and address the underlying factors.
Improving the road network in Ghana’s food basket areas and reducing foreign exchange rates could lower transportation and fuel costs, subsequently reducing food and non-food inflation to single digits, the report noted.
