Economist, Dr. Theo Acheampong is of the view that exchange rate volatilities could cause government to miss its end of year inflation target of 15 percent.

Analyzing some of the revised macro-targets in the Mid-Year Budget Review, he expressed optimism that the country may be able to achieve the Overall Real GDP Growth rate which has been revised upwards from 2.8 percent to 3.1 percent, but could miss the inflation target.

He pointed out that duties and taxes on goods imported into the country are normally index in dollars, a situation that unnecessarily increase prices of goods.

“Most of the charges on the ICUMS platform are charged in dollars. This means that when the cedi depreciates, importers will pay more at the ports”.

This, Dr. Acheampong argued the situation will always impact on prices of goods, leading to inflation.

“The importers will not bear that cost and will pass on the extra cost at the ports to consumers. This means consumers will pay more”, he said.

He maintained that these factors could derail the gains made in reducing inflation, ultimately causing government to miss its target.

Revised macro targets

Government has announced some key revisions to the country’s macroeconomic fiscal targets for 2024.
Presenting the Mid-year Budget in parliament on July 23, 2024, Finance Minister, Mohamed Amin Adam said the Overall Real GDP Growth rate has been revised upwards from 2.8 percent to 3.1 percent.

He stated that government has decided to maintain the end of year inflation target unchanged at 15 percent.

In addition, Non-Oil Real GDP Growth rate was also revised upwards from 2.1 percent to 2.8 percent.

“Nominal overall GDP has been revised from ₵1,050 billion to ₵1,020 billion. Non-Oil GDP has been revised from ₵979 billion to ₵977,093 billion”.

Dr. Amin Adam said that Primary Balance on Commitment basis has also been maintained at a surplus of 0.5 percent; while Gross International Reserves (including oil funds and encumbered/pledged assets) is expected to cover not less than 3.0 months of imports.

Announcing some revision to the 2024 fiscal framework, he explained that the primary balance on a commitment basis remains unchanged at the targeted surplus of 0.5% of GDP, in line with the IMF-supported PC-PEG objectives.

According to him, Total Revenue and Grants have been revised upward by 0.5 percent to ¢177,220 million (17.4% of GDP) in 2024, from the 2024 Budget target of ¢176,414 million (16.8% of GDP).

This, he pointed out largely reflects the increase in Non-Oil Non-Tax Revenue which has been increased from ¢14,837 million (1.4% of GDP) to GH¢15,638 million (1.5% of GDP) to reflect dividends from interest accrued in the ESLA accounts.