Editorial of the Daily Searchlight, Monday, 29th January, 2024
Dr Ernest Addison, Governor, Bank of Ghana (BoG) has allayed fears of increases in taxes leading to a rise in inflation, thereby, dampening government’s single digit inflation target.
“The Bank of Ghana will continue to manage the inflation side of the macroeconomy to ensure that the implementation of tax policies does not affect the downward trend of inflation we’ve seen in recent times,” Dr Addison said.
He said this at a joint press briefing in Accra on Friday, January 19, where the approval of Ghana’s second tranche US$600 million loan facility by the International Monetary Fund was announced.
The ongoing implementation of Ghana’s US$3 billion three-year Post COVID-19 Programme for Economic Growth (PC-PEG) with the IMF has led to increases in some existing taxes and the introduction of new ones.
That has made some Economic watchers to raise concerns of such development leading to high inflation, with its attendant impact on businesses and in the lives of Ghanaians.
Nonetheless, the Central Bank Governor noted that: “The increases in taxes should not necessarily lead to higher inflation, we rather expect that it will help improve fiscal consolidation and bring the overall macro pressures down.”
He stated that in recent times, monetary policy stance, stable crude oil prices, a relatively stable exchange rate environment, and a stronger foreign exchange reserve accumulation had supported Ghana’s disinflation process.
Dr Addison pledged that: “Government will continue to implement sound policies to further bring down inflation in 2024 until a single digit inflation is achieved.”
To achieve this, he said the Bank of Ghana would continue to monitor both domestic and external developments and respond appropriately to ensure that the downward inflation trajectory was sustained without undermining growth.
He envisaged that a challenging year confronted the country, but expressed optimism that ongoing structural reforms would support a better functioning of the economy.
The Daily Searchlight says;
It is a general economic assumption that higher taxes, leads to higher prices of goods and services. It also leads to a reduction in production. Both factors leads to rising inflation.
Indeed, it is a general economic presumption that the five causes of inflation are increase in wages, increase in the price of raw materials, increase in taxes, decline in productivity, and increase in money supply.
From the above, it is easy to assume that Dr. Addison is playing Houdini with us. He is talking sorcery and necromancy in place of economic knowledge, and we would do well to be careful in believing what he is saying.
His call on us to believe that the government would somehow be able to curb its urges to over-spend, is also to be taken with a dose of salt. It is the government that has gotten us here. It is the government that has kept us here in all the decades of Ghana’s existence, and we do not believe that we can take Dr. Addison’s words as signaling any kind of change in the near future.
Our final words to Dr. Addison; he knows that he has just been trotted out to say exactly what is expected of him. To ourselves as the people of Ghana, we say that it would be wise to ignore Dr. Addison.
