Ofori Atta Attributes May Inflation Rise To Utility Tariffs Adjustment

The Minister for Finance, Ken Ofori Atta, has attributed the country’s inflation rise to the implementation of the new utility tariffs.

During a press conference on Sunday, June 18, 2023, the Minister said despite the rise, a deceleration is expected later on.

“The relative rise in inflation in May 2023 appears to reflect the pass-through effect of the Utility adjustment in April and the implementation of the new tax handles in May. We expect inflation to decelerate going forward.”

Ghana recorded 42.2% in May- a rise from 41.2% recorded in April this year.

The Public Utility Regulatory Commission (PURC), announced an increase in electricity and water tariffs for the second quarter of the year after concluding the quarterly review in May last month.

Impact Of IMF Approval
In his address, the Minister said the country’s forex, foreign reserve, and current account balance are faring quite well following the International Monetary Funds’ approval of the country’s programme and the subsequent disbursement of $604 million.

“The cedi’s depreciation has largely stabilized over a year–to–year depreciation rate of 21.9% as of February 16 2023, down from 50% in December 2023…The gross international reserve has improved after the disbursement of the first tranche of $604 million following IMF approval.”

“The current account balance turned positive at 0.9% GDP at the end of March 2023 from -2.2% at the end of December 2022. In addition, the trade balance improved from 0.9% of GDP at end of the January 2023 to 2.2% at the end of April 2023,” he said.

He however noted that the approval won’t end the country’s economic woes.

“Securing the IMF programme is not an end to our current challenges though it has significantly paved the way for the implementation of an ambitious and well thought-up programme of reform for our economy and country.”

With reforms, the Minister said the country was expecting “multilateral support of about $2 billion for 2023 and $6.2 million between 2023 and 2026. We expect the World Bank to provide total support of $1.6 billion whiles the AfDB of $200 million over the programme period. In addition, we expect to mobilise catalytic funding- some $30 million this year between 2023 and 2026 from bilateral creditors.”