The Covid-19 outbreak and the devastation caused by the Russia-Ukraine war are two recent worldwide disasters that have prompted an economic discourse conducted by the Institute of Economic Affairs (IEA), Ghana in response to how best the economy can be stabilized.

Dr. John K. Kwakye, Senior Research Fellow at the IEA, Dr. Humphrey K. Ayim-Darke, President of the AGI, and Prof. Alexander Bilson Darku, Visiting Scholar at the IEA and Editor of the GPJ, were among the prominent economists who addressed that day Director of Research (IEA) Dr. John K. Kwakye urged the government to spend a portion of the windfall from the rise in crude oil prices on the world market to help Ghanaians pay less at the pump n his presentation on the theme, “RETHINKING INFLATION MANAGEMENT IN GHANA IN THE WAKE OF COVID-19 AND RUSSIA-UKRAINE WAR”

According to the statistical data Dr. Kwakye presented, since the price of petroleum products is one of the key factors contributing to the nation’s inflation, adopting this move will help to manage it and bring it down to sustainable levels.

He reaffirmed that the Bank of Ghana (BoG) and the central government must work together to solve the distinctive, cyclical nature of Ghana’s inflation, adding that the latter must accept ultimate responsibility for the inflation situation.

He added that managers of both monetary and fiscal policy needed to concentrate on an all-encompassing strategy that targeted both the demand and supply drivers of Ghana’s inflation.
He remarked by noting that Ghana’s inflation had a strong supply and cost undercurrents management tool for managing inflation.

“Also, in Ghana where wages, incomes, and aggregate demand are low and most people live from hand to mouth, to attempt to squeeze demand further through IT framework can exacerbate economic hardship, ” he said.
Referencing the recent statement by US Federal Reserve Chairman Jerome Powell that raising the Fed rate would not directly affect the cost of food and fuel, which are the main determinants of the present inflationary trend, he touched on the prospect of another policy rate hike.
“If food and fuel are drivers of the US inflation and the Fed rate will not have any effect on them, then what is justification for successive increases – and the signal for further increases in the rate, ostensibly to contain inflation?” he asked.

Dr. Humphrey K. Ayim-Darke, President of the Association of Ghana Industries (AGI), underlined the importance of strengthening the country’s agro-products value chain while participating in the discussions in his capacity as an industrialist.

To increase the value of agricultural products, he claimed that industries needed to be restructured to process more produce grown in the country.

According to Prof. Alexander Bilson Darku, a visiting scholar at the institute, the poor and underprivileged in society bear a disproportionate amount of the burden of inflation.
Therefore, he claimed, the central bank needed to concentrate on finding ways to prevent those people’s standard of life from getting worse.

According to Prof. Darku, for inflation targeting to succeed, it must be reviewed and modified to allow for the unique circumstances faced by the nation.
Since practically every consumer good has been impacted while wages and most earnings have essentially stagnated, Ghanaians are going through unimaginable socioeconomic hardships. When compared to other countries in Africa and internationally, Ghana’s inflation record reveals high levels of inflation in the past.

The IEA believes it is essential to promote discussions of the global inflation situation and offer solutions to be made available to policymakers for their attention and subsequently drive necessary action since Ghana is facing its fair share of the global inflation crisis.