The Institute of Statistical, Social and Economic Research (ISSER) at the University of Ghana has attributed rising labour agitations, high business costs, and the collapse of some businesses to the high foreign exchange rates and inflation.
This finding is sourced from the Institute’s assessment of the recent mid-year budget review presented by the Minister of Finance, Dr. Mohammed Amin Adam.
According to the report, in the first half of 2024, the cedi depreciated by 18.6% against the US Dollar, 17.9% against the Pound Sterling, and 16.0% against the Euro.
In 2023, the cedi depreciated by 27.8% against the US Dollar, 31.9% against the Pound Sterling, and 30.3% against the Euro.
In 2022, the cedi depreciated by 30.0% against the US Dollar, 21.2% against the Pound Sterling, and 25.3% against the Euro.
“This suggests some stabilization of the exchange rate over the past three years,” the report stated.
The report added that, aside from January, the cedi was generally more volatile against major foreign currencies (Dollar, Euro, and Pound) in the first half of 2024 compared to the same period last year.
Despite the increased volatility in 2024, the cumulative depreciation rates were relatively lower. The report urged the government to take further steps to reduce the rate of cedi depreciation against major trading currencies and to increase exports to lessen the demand for foreign exchange.
“It also recommended that the central bank enforce forex regulations more strictly and increase its presence in the exchange rate market.
With respect to inflation, the Institute referenced June 2024 inflation, which decreased to 22.8 per cent, adding that it represented a significant drop from the peak of 54.6 per cent in December 2022.
The Institute added: “However, compared to the inflation of 12.6 per cent in December 2021, this figure is still high,”
ISSER urged the government to examine the commodities driving inflation and commit to addressing the underlying factors.
“For instance, improving the road network in areas designated as the food basket of Ghana and reducing foreign exchange rates can help lower transportation costs and fuel costs, consequently reducing food and non-food inflation to single digits”, the report noted.