EDITORIAL (Daily Searchlight of Wednesday,, 20th July,, 2022)
Institute of Economic Affairs (IEA), a public policy institute, is asking the Government to provide subsidies on food, fuel, and transport, which are currently the major drivers of the country’s inflation.
This, together with strong policy tightening, including raising the policy rate, the think-tank believes, would help manage the inflationary pressures, and support production and economic growth.
Dr John Kwabena Kwakye, the Director of Research at IAE, said: “Even the IMF that is known not to be a fan of subsidies, has called on member governments to provide food subsidies to their citizens to cushion the cost-of-living crisis.”
He added that: “This call should tell us that new interventions are required in dealing with what is clearly an unconventional-type of inflation that is currently sweeping the globe.”
Dr Kwakye reiterated the Institute’s call for the Government to collaborate with the Bank of Ghana to deal with both the demand and supply side of inflation, noting that that would be more effective in dealing with the current increases in inflation rate.
He said: “We have called for the Bank of Ghana and Government to work together to target directly the key inflation drivers; food, fuel, transport and the exchange rate.”
The Daily Searchlight believes that the time has come for our economists and thinkers to start thinking out of the box and heading for textbooks anytime a problem comes up with regard to what is called the ‘economy’.
We believe that the solutions proposed by Dr Kwakye are mere ‘textbook’ solutions that anybody who has done a first year course in economics could have proposed. However, the fact is that the Bank of Ghana has been raising the policy rate, and government would claim that it has constantly been granting subsidies, puts the lie to his solutions. This is because prices and inflationary pressures have not responded to the efforts by the central bank and the government.
We believe that what should be the solution, is for government to invest in agriculture, specifically, inner city agriculture, so that people can begin to feed themselves with produce that can be harvested within six months.
Again, farmers with lands closer to population centres should be encouraged to work and produce higher volumes of goods, using more sustainable agricultural practices. By sustainable, we mean working with farm inputs that are cheaper, and easier to find.
Ultimately, when people are able to afford food at cheap rates (every human beings eats at least once a day but not everyone travels every day), the pressures on prices are likely to see a downward fall.
Let us tackle food inflation, using sustainable agriculture. Therein lies the solution to the inflationary pressures.
(This article was first published in the column EDITORIAL of the Daily Searchlight of Wednesday,, 20th July,, 2022. The Daily Searchlight appears on the newsstands of Ghana every working day and PDF versions are available for sale online twenty-four hours a day all day throughout the world on www.ghananewsstand.com).
