The President and Founder of IMANI Africa, Franklin Cudjoe, has said that Ghana’s inflation in July 2023 is three times higher than that of crisis-ridden Ukraine.
He pointed out that in July 2023, Ghana’s inflation stood at 43.1%, with interest rate inching toward 40%.
Franklin Cudjoe indicated that Ukraine’s inflation in the same month of July 2023 stood at 11.3%, which is thrice lower than Ghana’s inflation.
In a Facebook post on Thursday, August 10, 2023, the President of IMANI Africa emphasized the rate at which Ghana is galloping.
“Inflation is galloping… 43.1% interest rates inching towards 40%. Inflation in Ukraine is 11.3% in July,” he wrote on his Facebook page.
Background
The Bank of Ghana incurred a significant loss in 2022 largely as a result of the DDEP, its 2022 Annual Report, and Financial Statement have said.
According to the report, the central bank’s holdings of government debt were restructured whereas non-marketable holdings of Government of Ghana instruments including long-term stocks, a COVID-19 Bond, and overdrafts were subjected to a 50 percent haircut.
Bank of Ghana’s other claims (holdings of marketable instruments) were exchanged under similar terms as other financial institutions under the DDEP.
This led to an impairment of GH¢48.40 billion in 2022.
At the same time, the Central Bank incurred revaluation losses on its foreign assets and liabilities due to exchange rate depreciation.
The impairments and revaluation losses led to a negative equity position of GH¢55.12 billion for 2022.
The report also stated that despite a healthy trade surplus, the balance of payments recorded a deficit of US$3.64 billion on account of significant net outflows in the capital and financial account.
This led to a drawdown of US$3.46 billion in Gross International Reserves from US$9.70 billion at end-December 2021 to US$6.24 billion at end-December 2022, providing 2.7 months of import cover.
The significant drawdown in reserves triggered immense currency pressures and the reduction in the Common Equity Tier 1 capital ratio to 5.5 percent, from 6.5 percent, and an increase in the maximum Tier 2 capital ratio to 3.0 percent, from 2.0 percent of total risk-weighted assets.
