As part of efforts to address the various macro-economic challenges facing the Ghanaian economy in recent times, Director of the Institute of Statistical, Social and Economic Research, at the University of Ghana, Prof. Peter Quartey is calling for targeted fiscal policy and subsidy interventions.
This comes on the back of the continuous fuel price hikes and the rampant surge in inflation which have arisen due to the lingering COVID-19 pandemic and the Russia-Ukraine war.
As at May 2021 Ghana was enjoying the lowest rate of inflation it had recorded in years.
At 7.5%, the rate had fallen within the medium-term target band of the Bank of Ghana, which has stayed at between 6% and 10% for some time. Fast-forward to May 2022 and the story couldn’t be any different. National Inflation as of May this year had hit an 18-year high of 27.6%.
Speaking on the issue of rising fuel prices at Citi TV and ISSER’s Cedi Summit in Accra on Monday, Prof. Peter Quartey noted that though he supports the introduction of fuel subsidies to curb the impact of the increases on Ghanaians, government must be targeted in its strategy.
“This issue about subsidizing fuel, I don’t believe is a wholesale subsidy because you cannot subsidize both the rich and the poor at the same rate. If you need to subsidize them, then it needs to be targeted. You subsidize somebody who drives a small vehicle and subsidize another who drives an SUV…… That cannot be….same with electricity. You subsidize electricity for homes with more than four air conditioners. I think we need to target our subsidies very well. Perhaps there are more areas we need to channel our resources to. I don’t support blanket subsidies. We need to subsidize but not wholesale – blanket subsidy,” he said.
He also urged government to put in measures, to boost domestic food production to bring the cost of food down in order to check the rising inflation rate in the country.
While the contribution of food and non-alcoholic beverages to national inflation saw a reduction by 1.6 percentage points, it still stood at 48.4 %, indicating that the hike in food-related prices contributed about half of the overall inflation rate recorded in the country in May.
The Cedi Summit was organised by Citi TV in partnership with the Institute of Statistical, Social and Economic Research (ISSER) and ABSA Bank Ghana as part of this 2022 Citi Business Festival.
Keynote speakers at the summit were the Director of the Institute for Statistical, Social and Economic Research (ISSER) at the University of Ghana; Prof. Peter Quartey, the Head of FICC Research and Chief Economist at ABSA; Jeff Gable and David Ofosu-Dorte; a Senior Partner at AB & David.