Ghana’s Minister for Finance, Dr. Cassiel Ato Forson, has projected a significant decline in inflation, forecasting a reduction from the current 23.1% to 8% by the end of the year. This marks an expected 13% to 15% drop in headline inflation, signaling the government’s commitment to economic stability and easing the ongoing cost-of-living crisis.
Speaking during an X Space discussion on March 9, Dr. Forson highlighted key measures aimed at stabilizing the economy, emphasizing fiscal discipline as a primary tool in reversing inflationary pressures.
The February 2025 inflation rate dropped slightly to 23.1% from 23.5% in January, largely due to a steady decline in food inflation over the past four months. Government Statistician Prof. Samuel Kobina Annim acknowledged the improvement but noted that annual inflation levels remain among the highest recorded in the last 10 months.
Dr. Forson further addressed concerns about high interest rates and the crowding out of private sector borrowing due to excessive government reliance on bank loans. He assured that the government has begun scaling back its activities in the treasury market to free up liquidity for private enterprises.
“In the last two months, we have rejected bids amounting to GHS 10 billion on some occasions and between GHS 8 billion and GHS 5 billion at other times. Over time, banks will have no choice but to lend to the private sector,” he explained.
The Finance Minister highlighted a downward trend in Treasury bill (T-bill) rates, attributing the decline to reduced government borrowing. Notable reductions include:
91-day T-bill rate: Declined from 28% to 17.9%
182-day T-bill rate: Reduced from 29% to 18%
364-day T-bill rate: Dropped from 30.4% to 19.9%
“These reductions indicate a positive trend that, in the long run, will require the central bank to take monetary actions to reflect this progress,” Dr. Forson added.
The government aims to sustain these declining interest rates through collaborative efforts with the central bank, ultimately lowering the cost of borrowing and fostering business growth.
