The Governor of the Bank of Ghana, Dr. Johnson Pandit Asiama, has expressed confidence that inflation will ease to the Central Bank’s medium-term target of 8.2 percent by the end of 2025, despite risks posed by possible utility tariff hikes.
He made the assurance at the 126th Monetary Policy Committee (MPC) press briefing in Accra on Wednesday, where the Central Bank announced a significant cut in its policy rate by 350 basis points, lowering it from 25 percent to 21.5 percent.
The optimism comes even as the Electricity Company of Ghana (ECG) has proposed a 225 percent increase in distribution service charges and the Ghana Water Company Limited (GWCL) is seeking a 280 percent adjustment in tariffs under the 2025–2030 Multi-Year Tariff framework.
ECG has justified its request as necessary to avert financial collapse and sustain reliable electricity supply, while GWCL has attributed its proposal to the rising cost of water production driven by pollution from illegal mining.
Dr. Asiama acknowledged that upward tariff adjustments could put pressure on prices in the short term, but maintained that Ghana’s ongoing disinflation process would remain intact.
“In the outlook, headline inflation is expected to drop to within the medium-term target of 8 ± 2 percent by the end of the fourth quarter of 2025,” he said, stressing that appropriate monetary policy, strong liquidity management, fiscal consolidation, and adequate reserve buffers would sustain the disinflation process.
The Governor added that while tariff reviews are unavoidable for energy sector sustainability, the government would roll out targeted subsidies for low-income households and scale up energy efficiency programmes to cushion vulnerable groups.
Dr. Asiama also highlighted encouraging signs, noting that core inflation has declined consistently, reflecting the effectiveness of monetary and fiscal policies.
He cited improved global commodity prices for oil and food, favourable weather conditions to boost agriculture, and government support for farmers as key factors expected to reinforce disinflation.
On fiscal policy, the Central Bank Governor said the government’s consolidation programme, backed by the International Monetary Fund (IMF) under the Extended Credit Facility, was helping reduce deficit financing and strengthening macroeconomic stability.
The IMF has supported upward utility tariff adjustments, arguing that they are critical for addressing inefficiencies and preventing arrears in the energy sector.
Ms. Julie Kozack, IMF Director of Communications, recently emphasized that the reforms would also improve investment attractiveness in Ghana’s electricity industry.
However, President John Dramani Mahama has rejected the steep tariff proposals. Addressing journalists on September 10, the President said government did not agree with ECG’s request for a 225 percent increase.
“We are committed to exploring other measures to raise the necessary resources for ECG without transferring such a huge cost to consumers,” he said.
The President noted that his administration had already introduced reforms within ECG to improve efficiency, cut costs, and strengthen financial sustainability.
He insisted that ECG must focus on debt reduction and operational reforms rather than burdening Ghanaians with exorbitant tariffs, especially as the country seeks to operationalise the 24-hour economy initiative.
Ghana’s inflation has been on a steady decline, recording 11.5 percent in August 2025, down from 12.1 percent in July and marking eight consecutive months of reduction, according to the Ghana Statistical Service (GSS).
The fall has been supported by prudent monetary policy, cedi appreciation, fiscal discipline, and improved food supply.
However, economists note that while tariff risks remain, Ghana’s strong macroeconomic fundamentals suggest the country is on course to stabilise inflation within target and build investor confidence.
