By Rachel Savage
LONDON (Reuters) – Ghana is in a phase of “soul-searching” about whether to turn to the International Monetary Fund (IMF) for help and residents want policymakers to explore alternatives first, the country’s central bank governor said on Tuesday.
“Ghana has been to the IMF on 17 occasions and is still in this situation,” Ernest Addison said, in a panel discussion at the London School of Economics.
“I think that the Ghanaian people want to do a little bit of soul searching, to see whether there are other options, rather than rushing to the fund any time that the country is in crisis.”
Ghana’s public debt stood at 77% of GDP at the end of 2021, according to government data, and rising yields have shut it out of international bond markets, but its government has consistently ruled out asking the IMF for assistance.
Earlier this year, the government implemented an unpopular mobile money tax and pledged to cut spending in a bid to bring its debt under control.
The pace at which inflation is increasing in Ghana seems to be slowing, but it is not clear whether it has peaked yet, Addison said, as the country also faces price rises that hit a new 18-year peak in May.
Inflation rose to 27.6% year-on-year in May from 23.6% in April, while the cedi has shed 28% of its value this year. nL8N2XV2IG]
“The pace at which prices have gone up… appears to be slowing down,” Addison said. “But we are not sure whether (inflation has) peaked.”
The Bank of Ghana raised its main interest rate by 200 basis points to 19% in May, having already hiked it a record 250 basis points in March, in a bid to stem inflation.
Addison did not say whether he expected interest rates to be raised further.
Addison said that a central bank digital currency (CBDC) pilot in a rural area of Ghana would finish in a few weeks, but declined to give a timeline for its introduction.
He said the trial had had “good feedback”, with ordinary people buying “eCedi” tokens to use once they spent the ones they had been given.
(Reporting by Rachel Savage, editing by Deepa Babington)
