News Column

Ghana Inflation Worsens, Currency Loses

June 10, 2014

Masahudu Kunateh

FITCH Ratings, the leading provider of credit ratings, commentary and research firm, warned Bank of Ghana risked worsening the country's inflation rate if it continued printing money to finance the country's rising deficit.

According to a statement released by agency, it indicated that printing money "will aggravate already high inflation (14.7 percent in April 2014 and contribute to further cedi weakness."

Ghana has been grappling with the continuous fall of the Cedi against major trading currencies over the past few months.

The cedi has fallen 21 percent since the start of the year.

This has adversely affected the economy as local businesses are facing the brunt coupled with unstable power supply and rising cost of fuel prices.

The BoG in February instituted some measures to halt the cedi depreciation but currency continues to fall.

The government has also introduced new taxes to rake in more revenue, a policy which has ignited huge public outrage.

Fitch is however predicting that Ghana's budget deficit will go up to more than 10 percent of GDP above government's 8,5 percent target due to rising interest costs and weaker revenue growth.

"The Fiscal and external vulnerabilities have mounted in Ghana, and were reflected in rising bond yields and cancelled bond auctions as market participants appeared increasingly wary," Fitch stated.

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Source: AllAfrica

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