After international agencies degraded the Ghanaian sovereign rating, the country increased its interest rates by 3%. The government is battling inflation at a historical level of 32%. The only advantage of this drastic measure is that it could encourage the rapid adoption of a support plan currently being negotiated with the IMF.
The 3% increase decided by the Central Bank should push up the Cedi, the Ghanaian currency, which has already lost nearly 40% of its value in 2022. If the Cedi goes up, inflation ought to decrease to some extent, as the monetary authorities claim.
However, economic activity is also likely to slow down. The GDP growth has already been revised downwards this year and may not exceed 3.7%. The authorities' task is all the more difficult as the debt and all the payments linked to it have increased considerably, limiting the government's budgetary capacities.
The solution undertaken by the government was asking for help from the IMF in July. A multi-billion dollar program is under discussion. The Ghanaian boat is in the middle of a storm, but the situation is not entirely hopeless either. As the second largest economy in ECOWAS, the country has tangible assets, with solid agricultural and mining bases, and growing oil production.
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